An Internal Control Questionnaire Indicates That an Approved Receiving Report

question 34

Multiple Choice

An internal control questionnaire indicates that an approved receiving report is required to accompany every cheque request for payment of merchandise. Which of the following tests of control provides the greatest assurance that this control is operating effectively?

• A) Select and examine receiving reports and ascertain that the related voucher documents are dated no later than the receiving reports.
• B) Select and examine receiving reports and ascertain that the cancelled voucher documents are dated no earlier than the receiving reports.
• C) Select and examine voucher documents and ascertain that the related receiving reports are dated no later than the date of payment.
• D) Select and examine voucher documents and ascertain that the related receiving reports are dated no earlier than the date of payment.

Describe the effects of task difficulty and success/failure on attributions.

Recognize common biases in attribution, including the false consensus effect.

Understand the concept of linear relationships between two variables.

Identify and interpret scatter diagrams, including the direction and strength of a relationship.

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Definitions:

Cost of New Equity

The cost of obtaining additional funding through the issuance of new equity, considering underwriting fees and other issuance costs.

Retained Earnings

The portion of net income that is retained by the corporation rather than distributed to its owners as dividends.

Target Capital Structure

The relative amount of debt, preferred stock, and common equity that the firm desires. The weighted average cost of capital should be based on these target weights.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements, a crucial part of capital budgeting and often calculated using models like CAPM.