The Internal Control Process That Requires the Segregation of the Authorization

question 63

Multiple Choice

The internal control process that requires the segregation of the authorization of purchase returns and the accounts payable record keeping and the custody of inventory, will help to minimize the risk of:

• A)Incorrect amounts
• B)Fictitious returns
• C)Timing issues
• D)Duplicate returns

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Definitions:

Factory Overhead

The total indirect costs associated with manufacturing, excluding direct labor and direct materials.

Direct Materials

Raw materials that can be directly attributed to the production of finished goods in a manufacturing process.

Salesperson Commissions

Payments made to sales staff based on a percentage of the sales they generate, used as an incentive to increase sales performance.

Prime Costs

The direct costs of manufacturing, specifically direct labor and material costs.