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  • Mar 12, 2012, 06:41 PM
    crazykchick48
    Accounting Questions
    1.) Small payments, such as delivery charge and postage stamps, are paid for by removing cash from the cash register. Why is this bad accounting practice?
    2.) Office Supplies needed for operation of business are removed from the store's stock. No journal entry is made. Why is this bad accounting practice?
    3.) The owner regularly takes office and computer supplies from the business home. Why is this bad accounting practice?
  • Mar 16, 2012, 04:30 PM
    paraclete
    Handling of cash in a cash register should be strictly controlled. Unless the register provides for recording these transactions they should be handled by establishing a fund for minor purchases and the disbursment recorded and controlled by someone other than the cashier.
    If items are taken for use then this distorts the calculation of profit margin. It also sends the wrong signals to staff about the control of stock and the need for documentation at the very least a journal entry should be made carrying the cost to expense
    Same reason given above, although the business owner "owns" the stock business affairs should be separated from personal transactions.

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