Of the Following Statements About an Internal Control, Which One

question 9

Multiple Choice

Of the following statements about an internal control, which one is not valid?

• A)No one person should be responsible for the custodial responsibility and the recording responsibility for an asset.
• B)Transactions must be properly authorised before such transactions are processed.
• C)Because of the cost-benefit relationship, a client may apply control procedures on a test basis.
• D)Control procedures reasonably ensure that collusion among employees cannot occur.

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Definitions:

Operating Cash Flow

An assessment of the cash income resulting from a company's standard operational processes.

Millions

A numerical term representing one thousand thousands, or 1,000,000.

Common Stock

A type of equity security that represents ownership in a corporation, with rights to vote on corporate matters and receive dividends.

Net Income

The conclusive financial profit of a company after subtracting expenses and tax payments from its revenue stream.