Auditors Are Especially Concerned with Three Aspects of Internal Control

question 30

Multiple Choice

Auditors are especially concerned with three aspects of internal control for the sales and collection cycle. Which of the following is not one of their major concerns?

• A) controls over cutoff
• B) controls that prevent or detect embezzlements
• C) controls over sales discounts
• D) controls related to the allowance for uncollectible accounts

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Definitions:

Prepaid Rent

An expense that has been paid in advance for the use of a property, recognized as an asset until the rental period occurs.

Rent Revenue

Income earned from leasing out properties or equipment to tenants or lessees.

Decrease in Assets

A reduction in the value or quantity of the assets held by a company.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation and a claim on a portion of its profits or losses.