One of the Most Critical Controls to Prevent Theft of Inventory

question 2

Multiple Choice

One of the most critical controls to prevent theft of inventory purchased is to:

• A)Require authorization of the purchase requisition
• B)Segregate inventory custody from inventory record keeping
• C)Compare the purchase order, receiving report, and invoice
• D)Segregate the authorization of purchases from the inventory record keeping

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Definitions:

Joint Process

A manufacturing operation that produces multiple products simultaneously from the same process or raw materials, often seen in industries like chemicals or agriculture.

Premium Grade

Premium grade typically refers to products or materials that are of higher quality and therefore command a higher price.

Split-Off Point

The moment in the production process where multiple products become distinguishable from one another, and individual cost tracking can begin.

Net Operating Income

A measure of a company's profitability calculated as its total revenue minus operating expenses, excluding taxes and interest.