What Is the Rationale for the Internal Control Principle, Segregation

question 90

Multiple Choice

What is the rationale for the internal control principle, segregation of duties?

• A)History has shown that employees are generally dishonest and thus cannot be entrusted with performing related duties.
• B)The work of one employee should, without duplication of effort, provide a reliable basis for evaluating the work of another employee.
• C)Control is most effective when only one person is responsible for a given task.
• D)Segregation of duties causes companies to hire more employees and thus it supports the economy.

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Definitions:

Denominator Level

Refers to the total amount of capacity or activity base used to allocate fixed costs to products or services in cost accounting.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated at the beginning of a period by dividing estimated overhead costs by an estimated activity base.

Machine-Hours

A measure of production output or work using machines, calculated as the number of machines used multiplied by the hours they operate.

Fixed Overhead Budget Variance

The difference between the actual fixed overhead costs incurred and the budgeted fixed overhead costs.