Which of the Following Would Offer the Best Protection for a Company

question 68

Multiple Choice

Which of the following would offer the best protection for a company that wishes to prevent a reoccurrence of a previously detected "lapping" problem with trade accounts receivable?

• A) Separate duties so that the bookkeeper in charge of the general ledger has no access to incoming mail.
• B) Separate duties so that no employee has access to both checks from customers and currency from daily cash receipts.
• C) Have a mandatory vacation policy for employees who both handle cash and enter cash receipts into the system.
• D) Request that customer's payment checks be made payable to the company and addressed to the treasurer.

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Definitions:

Equilibrium Quantity

The quantity of goods or services bought and sold at the equilibrium price, where demand equals supply.

Negative Externality

occurs when the production or consumption of a good or service imposes costs on third parties not directly involved in the transaction.

Government Intervention

Actions taken by a government to influence or regulate the economy or specific industries, often to correct market failures or promote social welfare.

Equilibrium Quantity

The quantity of goods or services supplied that is equal to the quantity demanded at the market equilibrium price.