Which of the Following Situations Indicates a Potential Material Weakness

question 51

Multiple Choice

Which of the following situations indicates a potential material weakness in internal control over acquisition and expenditure?

• A)Purchase orders are not prepared for services acquired directly under authorization of department heads.
• B)The same person authorizes voucher packages and signs checks.
• C)Unacceptable goods are not scheduled on receiving reports.
• D)The same person signs checks and stamps vouchers PAID.

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Definitions:

Required Return

The minimum return an investor expects to achieve by investing in a particular asset, reflecting the risk associated with the investment.

Net Cash Flows

The difference between a company's cash inflows and outflows in a given period, indicative of its financial health.

Capital Budgeting

The process of evaluating and selecting long-term investments consistent with the firm's goal of wealth maximization.

Net Cash Flows

The difference between cash inflows and outflows during a specific period, reflecting the company's financial health.