For Effective Internal Control Purposes, Which of the Following Individuals

question 70

Multiple Choice

For effective internal control purposes, which of the following individuals should be responsible for mailing signed cheques?

• A) Computer operator.
• B) Financial controller.
• C) Accounts payable clerk.
• D) Payroll clerk.

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Definitions:

Adverse Selection

A term describing a situation where due to asymmetric information between buyers and sellers, the party with more information (often the seller) takes advantage of the other, leading to a market with higher risks and lower quality products.

Moral Hazard

Moral hazard occurs when a party is more likely to take risks because the negative consequences of the risk will be borne by another party.

Present Value

The present-day worth of a forthcoming sum of money or cash inflows, assessed at an agreed-upon return rate.

Interest Rate

The percentage charged on a loan or paid on savings, indicating the cost of borrowing or the reward for saving.