Which of the Following Procedures Would Best Detect the Theft

question 72

Multiple Choice

Which of the following procedures would best detect the theft of valuable items from an inventory that consists of hundreds of different items selling for $1 to $10, and a few items selling for hundreds of dollars?

• A)Have an independent audit firm prepare an internal control structure report on the effectiveness of the controls over inventory.
• B)Maintain perpetual inventory records with frequent periodic verification of the accuracy of these records.
• C)Require an authorised officer's signature on all requisitions for the more valuable items.
• D)Have separate warehouse space for the more valuable items with sequentially numbered tags.

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Definitions:

Risk-Free Rate

The rate of return on an investment with zero risk, typically associated with government bonds, serving as a baseline for evaluating investment risk.

Put Option

A financial contract giving the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Exercise Value

The value of an option if it were exercised at the current time; essentially the difference between the strike price and the current price of the underlying asset.

Strike Price

The specified price at which an option contract can be exercised to buy or sell the underlying asset.