Consider the following scenarios: When we talk about \"bad checks,\" are thoseal
ID: 2457095 • Letter: C
Question
Consider the following scenarios:- When we talk about "bad checks," are thosealways checks our customers have written to us? Would the companyalso write any bad checks and what are the repercussions for thesame? Give examples to support your answer. You can also refer tothe Business Week magazine for providing the solution.
- Suppose one person opens the cash receipts(checks received in the mail), makes the bank deposits, and keepsthe A/R records. What top 3 potential problems could arise due tolack of separation of duties?
- Why would a store offer a free purchase to acustomer, who does not receive a receipt for a purchase alreadymade by him/her?
Explanation / Answer
Repercussions of writing a badcheck
1 The check writer may be charged a fee by his/ her ownfinancial institution.
2 The recipient may choose not to accept checks in the futurefrom the writer , or may suspend the check writer’sprivelages until the check-writer has made good on the debt.
3 The recipient may choose to report the writer to a databaselike Telecheck, Shared Check Authorization Network or ChexSystems.
If all the tasks are carried out by asingle person, the following problems might arise:
A receipt is a documentary evidence of a purchase made by acustomer.
It is the starting point for claims made against warranties.
Hence if a customer does not receive a receipt from a store, thestore is bound to offer him/her a free purchase.