Which of the Following Controls Would an Entity Most Likely

question 58

Multiple Choice

Which of the following controls would an entity most likely use in safeguarding against the loss of marketable securities?

• A) An independent trust company that has no direct contact with the employees who have recordkeeping responsibilities has possession of the securities.
• B) The internal auditor verifies the marketable securities in the entity's safe each year on the balance sheet date.
• C) The independent auditor traces all purchases and sales of marketable securities through the subsidiary ledgers to the general ledger.
• D) A designated member of the board of directors controls the securities in a bank safe-deposit box.

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Definitions:

Predetermined Overhead Rate

The rate used to allocate manufacturing overhead costs to products, computed before the period begins based on estimated costs and activity levels.

Direct Labor-Hours

Full count of working hours by employees in direct connection with the production process.

Job Cost Sheet

A document that records the materials, labor, and manufacturing overhead costs assigned to each individual job.

Machine-Hours

A unit of measure reflecting the amount of time a machine is operated, used in cost accounting and operational management to allocate machine costs to products.