Which of the Following Controls Would a Company Most Likely

question 18

Multiple Choice

Which of the following controls would a company most likely use to safeguard marketable securities when an independent trust agent is not employed?

• A) The investment committee of the board of directors periodically reviews the investment decisions delegated to the treasurer.
• B) Two company officials must be present to access marketable securities, which are kept in a bank safe-deposit box.
• C) The internal auditor and the controller independently trace all purchases and sales of marketable securities from the subsidiary ledgers to the general ledger.
• D) The chairman of the board verifies the marketable securities, which are kept in a bank safe-deposit box, each year on the balance sheet date.

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Definitions:

Batch-Level Costs

Costs that are incurred for every batch produced, regardless of the size of the batch, such as setup costs or inspection costs.

Product-Level Costs

Expenses directly tied to specific products, including costs for materials and labor required to produce these products, as well as costs associated with specific product designs or customized orders.

Traditional Costing System

An accounting method that allocates overhead costs to products based on a predetermined overhead rate.

Activity-Based Costing System

A costing methodology that assigns manufacturing overhead costs to products based on the activities and resources that go into producing them.