Which of the Following Is Consistent with Effective Internal Control

question 35

Multiple Choice

Which of the following is consistent with effective internal control over sales transactions?

• A)The accounting department prepares a shipping report authorizing the shipment of goods.
• B)The accounting department accounts for all receiving reports.
• C)The billing department accounts for all shipping documents.
• D)The accounts payable department annually approves the extension of credit to customers.

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Definitions:

Fixed Costs

Costs that do not vary with the quantity of output produced, such as rent or salaries.

Economic Profit

The difference between total revenue and total cost, including both explicit and implicit costs, representing excess earnings over the opportunity cost of capital.

MR Curve

The marginal revenue curve, which shows how the revenue from selling one more unit of a good or service changes as the quantity sold changes.

Economic Losses

Occurs when a company's total costs exceed its total revenues, indicating that the business is not efficiently allocating its resources.