An entity's internal controls should be designed to achieve a variety of objectives.

Assume that an entity wishes to accomplish the following four control objectives:

1. Transactions should be executed in accordance with management's authorization.

2. Transactions should be recorded as necessary: (1) to permit preparation of financial statements in conformity with generally accepted accounting principles and (2) to maintain accountability for assets.

3. Access to assets should be permitted only in accordance with management's authorization.

4. The recorded accountability for assets should be compared with the existing assets at reasonable intervals, and appropriate action taken for any differences.

To achieve these objectives, management could institute a number of control activities, including the following:

a. Unused, blank checks are stored in locked safes.

b. A bank reconciliation is prepared monthly by personnel independent of the cash function.

c. Credit approval is required for all new customers and for all credit purchases over

$10,000.

d. Accounts receivable postings are made from a listing of remittances prepared daily.

e. Perpetual inventory records are updated daily from manufacturing reports.

f. A physical inventory observation is performed monthly.

g. All capital asset acquisitions are reviewed by the board of directors, h. Only authorized personnel are allowed to enter manufacturing sites.

Required: 

For each of the above control activities, a through h, indicate which objective, 1 through 4, is achieved.