Which One of the Following Situations Reflects a Weak Internal

question 162

Multiple Choice

Which one of the following situations reflects a weak internal control system?

• A) All employees are well supervised.
• B) A single employee is responsible for comparing a receiving report to an invoice.
• C) All employees must take their vacations.
• D) A single employee is responsible for collecting and recording of cash.

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Definitions:

Fixed Expense

An expense that does not change with the level of production or sales, such as rent, salaries, and insurance.

Administrative Expense

Costs related to the general administration of a business, including office supplies, salaries of administrative personnel, and utilities.

Freight-Out

The cost of shipping goods to customers, which is typically recorded as a selling expense.

Production Budget

A plan that outlines the number of units to be produced within a specific period to meet anticipated sales and inventory needs.