Internal Controls That Should Be Applied When a Business Takes

question 117

Multiple Choice

Internal controls that should be applied when a business takes a physical count of inventory should include all of the following except:

• A) A manager confirms that all inventories are ticketed only once.
• B) Counters of inventory should be those who are responsible for the inventory.
• C) Counters confirm the validity of inventory existence, amounts, and quality.
• D) Prenumbered inventory tickets.
• E) Second counts by a different counter.

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Definitions:

Support Department

A department that provides a necessary service to produce a product but is not directly involved in the production process. Also known as a service department.

Human Resources Department

The division of a business that is focused on activities relating to employees, including hiring, training, and benefits management.

Investment Center

A decentralized unit in which the manager has the responsibility and authority to make decisions that affect not only costs and revenues but also the fixed assets invested in the center.

Plant Assets

Physical resources that are owned and used by a business and are permanent or have a long life; long-term or relatively permanent tangible assets such as equipment, machinery, and buildings that are used in normal business operations.