1. Regarding the Revenue Cycle, a basic threat during sales order entry is that important data about the order will be either missing or inaccurate. Explain how this risk can be mitigated.
2. Explain one (1) internal control procedure that would provide protection against the following Revenue Cycle threats:
- Making a credit sale to a customer who is already four months behind in making payments on his account.
- Writing off a customer's accounts receivable balance as uncollectible to conceal the theft of subsequent cash payments from that customer.
3. Explain one (1) internal control procedure that would be most cost-effective in dealing with the following Expenditure Cycle threats:
- An unordered supply of laser printer paper delivered to the office is accepted and paid for because the "price is right." After jamming all of the laser printers, however, it becomes obvious that the "bargain" paper is of inferior quality.
- The petty cash custodian confesses to having "borrowed" $12,000 over the last five years.
4. Explain one (1) internal control procedure that would best prevent or detect the following Production Cycle problems:
- A production employee stole items of work-in-process inventory.
- A production worker entering job-time data on an online terminal mistakenly entered 3,000 instead of 300 in the "quantity-completed" field.