Which of the Following Controls Would a Company Most Likely

question 305

Multiple Choice

Which of the following controls would a company most likely use to safeguard marketable securities when an independent trust agent is not employed?

• A) The investment committee of the board of directors periodically reviews the investment decisions delegated to the treasurer.
• B) Two company officials have joint control of marketable securities, which are kept in a bank safedeposit box.
• C) The internal auditor and the controller independently trace all purchases and sales of marketable securities from the subsidiary ledgers to the general ledger.
• D) The chairman of the board verifies the marketable securities, which are kept in a bank safe-deposit box, each year on the balance sheet date.

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Definitions:

Employee Retirement Income Security Act

A federal law that sets minimum standards for pension plans in private industry and provides for extensive rules on the federal income tax effects of transactions associated with employee benefit plans.

Benefit Plan

A set of benefits provided by an employer to its employees, which may include health insurance, retirement savings plans, and other perks.

Consolidated Omnibus Budget Reconciliation Act

A U.S. federal law that provides individuals and their families the option to continue healthcare coverage for a limited time after losing health benefits.

Policy Premiums

The amounts of money that individuals or organizations pay for insurance policies over a set period.