When Certain Customers Made Cash Payments to Reduce Their Accounts

question 106

Multiple Choice

When certain customers made cash payments to reduce their accounts receivable,the bookkeeper embezzled the cash and wrote off the accounts as uncollectible.Which control procedure would most likely prevent this irregularity?

• A)segregation of duties
• B)accounting records
• C)accounting system
• D)access controls

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Definitions:

Discounted Payback Period

The time required to recoup the cost of an investment while considering the time value of money, typically shorter than simple payback period.

Required Return

The least profit anticipated by an investor from an investment in a certain asset, given its risk profile.

Cash Flows

The net amount of cash being transferred into and out of a business, especially as affecting liquidity.

Average Accounting Return

A measure of profitability calculated as the average net income divided by the average book value of investment over a period.