Requiring Employees to Take Vacations Is a Weakness in the System

question 71

True/False

Requiring employees to take vacations is a weakness in the system of internal controls because it does not promote operational efficiency.

Grasp the significance of setting transfer prices and the approaches used.

Understand and identify the differences between investment centers and profit centers.

Calculate investment turnover and understand its implications.

Calculate profit margin and understand its relevance in assessing divisional performance.

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Definitions:

Dual Capacity

Refers to a situation where an entity or person functions in more than one role or capacity, often leading to different sets of responsibilities and rights.

Principals

The main parties involved in a business transaction or agreement, usually responsible for entering into a contract.

Agent

An individual or entity authorized to act on behalf of another (the principal) in transactions or other matters.

Duty Of Obedience

The requirement for directors and officers of an organization to act in accordance with its goals and directives.