BIMTECH PGDM (RM) Assignment No 1

Case 1
Introduction: Kavya owns a small craft shop in Mumbai and faces the issue of potential
fraud occurring in her business. Below are some of the potential sources of fraud for her
business, you are required to suggest some internal control mechanism that could be
implemented to improve the security of her business finances.
Potential Fraud:
1. Lucy is responsible for recording sales and preparing bank deposits. Given her
autonomy with this process, Lucy could be underreporting sales and failing to
deposit all of the money.

2. The store that Kavya owns may have a petty cash fund that was established for
smaller and miscellaneous expenses. If they do have a petty cash fund, employees
may be incorrectly being reimbursed from the fund.

3. Kavya’s store just implemented a new coupon discount program. Employees

could be scanning coupons but charging the customers full price and then
pocketing the difference.

4. There is no evidence of a system to track the hours that each employee works.

5. Kavya is responsible for the oversight of inventory, orders for new inventory,
and payments of inventory. She could commit an act of fraud by falsifying
orders, paying them to an external account, and expensing more inventory than
actual to make up for the difference. This would reduce the income tax expense
of the business by underreporting income while funneling cash out of the
business.

6. Kavya has full custody of assets, and she also does the record keeping.

7. Kavya and Lucy both have access to the accounting system, with Kavya handling
all accounting functions and Lucy recording sales data and preparing bank
deposits.

8. There is only one credit card machine for both cash registers.

9. There is no mention of a security system.

10. Each employee has full authority to enter each type of transaction, meaning that
they could change previous transactions.
Question 1
Following transactions of Ramesh for April,2018 are given below. Journalise them.

Question 2
Journalise the following transactions , post them into Ledger and prepare a Trial
Balance:
3.There are several Mistakes in the Umer & Brothers (Pvt.) Ltd. Trial Balance. You are
requested to identify Errors and make corrected Trial Balance?

4. Record the following transactions in the Journal and post them into ledger and prepare a
Trail Balance

Oct 1st : Neel started business with a capital of 80,000

3rd : Bought goods from Karl on credit 20,000
4th : Sold goods to Tarl 25,000
5th : Cash purchases 25,000
7th : Cash sales 15,000
9th : Goods retuned to Karl 2,000
 10th : Bought furniture for 15,000
11th : Cash paid to Karl 12,000
12th : Goods returned by Tarl 3,000
14th : Goods taken by Neel for personal use 3,000
15th : Cash received from Tarl 12,000
16th : Took loan from Parl 30,000
17th : Salary paid 5,000
18th : Bought stationery for 1,000
19th : Amount paid to Parl on loan account 18,000
20th : Interest received 4,000