An Example of Poor Internal Control Is

question 119

Multiple Choice

An example of poor internal control is

• A) The accountant should not have physical custody of the asset nor access to it.
• B) The custodian of an asset should not maintain or have access to the accounting records.
• C) One person should be responsible for handling related transactions.
• D) A salesperson makes the sale and a different person ships the goods.

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Definitions:

Excess Capacity

Refers to a situation where a company has more production capability available than is necessary to meet demand, often resulting in unused resources or facilities.

Financial Advantage

A benefit that helps to improve a company's financial position, which can include lower costs, access to new markets, or additional revenues.

Financial Advantage

The benefit gained in financial terms, providing an edge over competitors or contributing to financial stability.

Outside Supplier

An external organization or company that provides goods or services to another company as opposed to internal sources.