Which of the Following Internal Controls Would Be Most Likely

question 51

Multiple Choice

Which of the following internal controls would be most likely to deter the lapping of collections from customers?

• A)Supervisory comparison of the daily cash summary with the sum of the cash receipts journal entries.
• B)Segregation of duties between receiving cash and posting the accounts receivable ledger.
• C)Authorisation of write-offs of uncollectible accounts by a supervisor independent of the credit approval function.
• D)Independent internal verification of dates of entry in the cash receipts journal with dates of daily cash summaries.

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Definitions:

Borrowed Funds

Funds obtained through loans or credit, not from direct earnings or investments.

Leverage

The ability to finance an investment through borrowed funds, increasing both the potential for return and the level of risk.

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit, encompassing stocks, bonds, real estate, and other assets.

Principal

An amount of money borrowed from a lender.