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:

Perfect Competition

An ideal market scenario in which there are many buyers and sellers, homogeneous products, and no barriers to entry or exit.

Transfer Pricing Formula

A method used to determine the price at which goods and services are sold between divisions within the same company.

Variable Cost

Costs that vary in total in direct proportion to changes in the level of activity or volume of output produced.

Divisional Managers

Managers who are responsible for overseeing the operations, profitability, and strategic planning of a specific division within a company.