Which of the Following Controls Would Be of Concern to Management

question 40

Multiple Choice

Which of the following controls would be of concern to management but not to the auditor?

• A) controls over the collection of accounts receivable amounts
• B) controls over the entry of payroll wage rates into the computer systems
• C) controls over the distribution of promotional information to potential clients
• D) controls over the cost of inventory items as recorded in the perpetual inventory system

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Definitions:

Accounts Receivable

Money owed to a business by its clients or customers for goods or services that have been delivered or used but not yet paid for.

Sales

The total revenue earned from the sale of goods or services by a company during a specified period.

Net Price Method

An accounting method that records purchases at the net cost, after deducting any purchase discounts, rather than recording them at the gross cost.

Cash Discounts

Reductions in the price of goods or services offered to customers as an incentive for early payment.