Question

At the West Texas Clothing Store, a sales employee assists customers with finding the items the customer wishes to purchase, then rings up the purchase and collects the cash. At the end of the day, this employee counts the cash and fills out a cash-count form. Which internal control procedure is being violated by West Texas Clothing Store?

A) Competent, reliable, and ethical personnel should be hired.
B) Job rotation improves internal control.
C) To validate their accounting records, a company should have an audit by an external accountant.
D) Separation of duties is necessary.

Answer 1

The internal control procedure being violated by West Texas Clothing Store is the separation of duties.

Step-by-step explanation:

The internal control procedure being violated by West Texas Clothing Store is D) Separation of duties is necessary. Separation of duties refers to the practice of dividing responsibilities among different employees to reduce the risk of fraud or errors. At West Texas Clothing Store, the sales employee is both assisting customers and handling cash, which violates the principle of separation of duties. Ideally, one employee should assist customers while another employee handles the cash and completes the cash-count form.