An Entity's Internal Control Structure Requires for Every Check Request

question 62

Multiple Choice

An entity's internal control structure requires for every check request that there be an approved voucher,supported by a prenumbered purchase order and a prenumbered receiving report.To determine whether checks are being issued for unauthorized expenditures,an auditor most likely would select items for testing from the population of all

• A)Purchase orders.
• B)Canceled checks.
• C)Receiving reports.
• D)Approved vouchers.

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Definitions:

Normal Balance

The side (debit or credit) on which increases to an account are recorded, depending on the type of account.

Liability Account

An accounting record that represents a company's legal debts or obligations that arise during the course of business operations.

Revenue Account

An account that tracks the income generated from a company's primary operations.

Asset Account

An account on a balance sheet representing the resources owned by a company, with future economic benefit.