Which of the Following Is NOT a Requirement for an Effective

question 85

Multiple Choice

Which of the following is NOT a requirement for an effective control system?

• A) It should be flexible enough to cope with unanticipated changing patterns and problems.
• B) It should not be changed in any way after it is adopted until it is abandoned.
• C) It should expose deviations as they occur and indicate who is responsible for the deviation.
• D) It should be suitable for the activity to be observed.

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Definitions:

Collection Float

The time period between when a check is deposited in a bank and when the funds are made available, reflecting the bank's processing time.

Mail Float

The time difference between when a check is written and when it is actually cleared and funds are deducted from the payer's account.

Availability Float

The time difference between when a check is deposited in a bank account and when the funds are made available.

Miller-Orr Model

A financial model used to manage cash balances by setting upper and lower limits on cash reserves, triggering buying or selling of securities when these thresholds are crossed.