McDonald's Corporation is the largest food service organization in the world. The proper handling of cash and food is important to the profitability of McDonald's. Based on your personal knowledge of McDonald's and the internal control concepts and
procedures described in the textbook, answer the following questions. REQUIRED: Describe procedures that you believe McDonald's may use to control the purchase and payment of food products.
A company like McDonald's might negotiate contracts with vendors to supply food products to arrive daily or weekly. This might suppress the need for using purchase requisitions and purchase orders for food products. However, the typical procedures beginning with receiving reports for invoice approval would apply. Receiving reports and contracts would be compared with invoices. Invoice footings and extensions would be verified. Completion of all steps in the approval process would be verified before checks are prepared. Specified employees would sign checks, either using check signing machines or personal signatures. All documents included in the invoice approval process would be canceled when the checks are prepared. Employees who handle the checks would not be allowed to prepare journal entries.
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