In Testing Controls Over Cash Disbursements, an Auditor Most Likely

question 54

Multiple Choice

In testing controls over cash disbursements, an auditor most likely would determine that the person who signs the checks also

• A) Reviews the monthly bank reconciliation.
• B) Returns the checks to accounts payable.
• C) Is denied access to the supporting documents.
• D) Is responsible for mailing the checks.

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Definitions:

Absorption Costing

A strategy in accounting practice that aggregates all manufacturing expenses, from direct materials and labor to variable and fixed overheads, into the determination of a product's cost.

Break-Even Sales

The amount of revenue required to cover both the variable and fixed costs of a business, indicating no profit and no loss.

Contribution Margin

The amount by which the sale of a product exceeds its variable costs, contributing to covering fixed costs and generating profit.

Commercial Segment

A portion of a market composed of businesses and organizations, as opposed to individual consumers.