Which of the Following Is Desirable in a Good System

question 61

Multiple Choice

Which of the following is desirable in a good system of internal accounting control?

• A) All accounting personnel in a company should be Certified Public Accountants
• B) Appropriate forms, such as checks and sales invoices, should be prenumbered
• C) To obtain the benefit of specialization, employees should not be rotated among jobs
• D) Responsibility and authority for a given function should be shared among several employees

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Definitions:

DuPont Formula

An expanded expression of return on investment (ROI) determined by multiplying the profit margin by the investment turnover.

Return on Investment

Return on Investment, or ROI, measures the gain or loss generated on an investment relative to the amount of money invested.

Invested Assets

Financial assets purchased with the expectation that they will generate income or profit, or appreciate in value.

Operating Income

Earnings before interest and taxes (EBIT) is a company's profit from normal operations, excluding non-operating income and expenses.