Which of the Following Policies Constitutes a Control Weakness Related

question 31

Multiple Choice

Which of the following policies constitutes a control weakness related to the acquisition of factory equipment?

• A)Acquisitions are to be made through and approved by the department in need of the equipment.
• B)Advance executive approvals are required for equipment acquisitions.
• C)Variances between authorized equipment expenditures and actual costs are to be immediately reported to management.
• D)Depreciation policies are reviewed only once a year.

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Definitions:

Total Cost

The entirety of spending on the production of products or services, incorporating both costs that are constant and those that can change.

Suffer Losses

A situation where a business or individual incurs expenditures that exceed their revenues or income, resulting in a negative financial outcome.

Output Ranges

Output ranges refer to the span of production levels that a firm or economy can achieve within certain capacities or under specific conditions.

Average Variable Cost

The total variable costs of production divided by the quantity of output produced, indicating the cost of producing each additional unit.