Kumar Is the Internal Auditor of Tarragon Inc

question 37

Multiple Choice

Kumar is the internal auditor of Tarragon Inc.Kumar wants to put procedures in place to prevent misstatements in owners' equity and ensure proper record keeping.Kumar has suggested that management implement well-defined policies for preparing stock certificates and recording capital stock transactions.What else should Kumar recommend?

• A)independent internal verification of information in the records
• B)having all journal entries in the equity account reviewed by the controller
• C)performing a monthly reconciliation of shareholder's equity
• D)reconciling the dividend payments with the bank statement

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Definitions:

Machine Hours

A measure of the amount of time a machine is operated, used as a basis for allocating manufacturing overhead costs to products.

Direct Labor Hours

The total hours of work directly involved in the production of goods, often used in costing and operational efficiency analysis.

Materials Handling

The movement, protection, storage, and control of materials and products throughout manufacturing, warehousing, distribution, consumption, and disposal.

Activity Rate

A measure used in activity-based costing to assign overhead costs to products or services, based on specific activities.