Internal Control Activities Within the Purchasing Process, Identified as Segregation

question 33

Multiple Choice

Internal control activities within the purchasing process, identified as segregation of duties, would include all of the following, except:

• A)Responsibility for authorization, custody, and record keeping are to be assigned to different individuals.
• B)Duties related to requisitioning, ordering, purchase approval, receiving, inventory control, accounts payable, and general accounting are to be delegated to separate departments or individuals.
• C)Complete separation of inventory custody from inventory accounting.
• D)Purchasing records and programs must be protected from unauthorized access.

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Definitions:

Industry Profit

The total earnings generated by companies within a specific industry after covering all operating costs.

Marginal Cost

The financial outlay required to produce an additional unit of a product or service.

Fixed Cost

Expenses that do not change with the amount of goods or services produced, such as rent, salaries, and insurance premiums.

Cartel

An agreement among competing firms to control prices or exclude entry of a new competitor in a market.