Direct Serving Loans Method Requires a System of Good Internal

question 204

Multiple Choice

Direct serving loans method requires a system of good internal control and requires that the functions be split between the Accounting Department and the Investment Department. In such a case the Accounting Department is responsible for all of the following EXCEPT:

• A) Supplying the Investment Department with correct data and reports that summarize all loan transactions
• B) Alerting the Investment Department promptly whenever an exception to the normal processing routine occurs
• C) The design, maintenance, and accuracy of accounting records, for periodic management and exception reports, and for statutory statement preparation
• D) Its records may or may not provide the needed data to support this reporting function

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Definitions:

Applied Overhead

The portion of overhead costs allocated to individual jobs or products based on a predetermined rate.

Raw Materials Inventory

The total cost of all the components used to manufacture a product that a company has in stock but has not yet used in production.

Factory Overhead

Factory overhead refers to all the indirect costs associated with manufacturing, excluding direct labor and direct materials, such as utility costs and maintenance expenses.

Work in Process Inventory

Products that are under construction but haven't been fully finished.