ACC 400 Week 2 Team Assignment-Text Assignments Exercise

Week 2: E-text Learning Team AssignmentsFinancial Accounting: Tools for Business Decision Making, 4th edition
Chapter 7: Exercise E7-2
Identify the six principles of internal control and give an example of each principle that you might observe when picking up your pizza.
Protecting assets is crucial to the survival of any organization. Therefore, to protect assets while increasing the reliability and accuracy that accounting records are kept, six principles of internal control were developed (Kimmel, Weygandt & Kieso, 2007). Those six principles include “establishment of responsibility, segregation of duties, documentation procedures; physical, mechanical, and electronic controls, independent internal verification, [and] other controls” (Kimmel, Weygandt & Kieso, 2007, p. 317). 
In regard to picking up a pizza, the six principles are evident. The first principle, establishment of responsibility, protects assets by creating responsibility among employees. The assets at a pizza place include the cash and the inventory (i.e. pizza). Typically, one person is responsible for the cash register while another is responsible for delivering or making the pizza. Therefore, the person responsible for the cash register is also responsible for any overages or shortages of cash, and the person delivering or making the pizza is responsible for the ensuring the pizza is delivered to the right customer.
Segregating duties prevents employees from performing related activities to further protect a company’s assets. In a pizza place, an example of segregating duties is the separation of the person taking the order and the person delivering the pizza. If both jobs were performed by one individual, he or she may undercharge the customer and over deliver on the pizza. For example, a friend may call and ask for several pizzas to be delivered. If only one person performed the duties of taking the order and delivering the product, he or she could charge the person who called for one pizza and deliver two or three pizzas instead. Segregating these duties provides preventive measures to safeguard against such actions. 
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