Which of the Following Situations Would Indicate Increased Inherent Risk

question 12

Multiple Choice

Which of the following situations would indicate increased inherent risk in the accounts payable and acquisition cycle?

• A)good quality internal controls for cash handling
• B)the use of packaged software for accounting (including accounts payable)
• C)the use of clear,standard terms when negotiating vendor discounts
• D)significant related party transactions

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Definitions:

Predetermined Price

A price set in advance, often based on cost calculations, market predictions or agreements, before a transaction takes place.

Labor Productivity

refers to the amount of goods and services produced by one hour of labor.

Profit-sharing Bonuses

A type of incentive where employees receive additional compensation based on the company's profits, encouraging ownership behavior and aligning interests.

Non-management Employees

Individuals within an organization who do not hold managerial or supervisory positions and are responsible for executing tasks and operations as directed by management.