An Internal Control Questionnaire Indicates That an Approved Receiving Report

question 27

Multiple Choice

An internal control questionnaire indicates that an approved receiving report is required to accompany every check request for payment of merchandise.Which of the following procedures provides the greatest assurance that this control is operating effectively?

• A)Select and examine receiving reports and ascertain that the related canceled checks are dated no earlier than the receiving reports.
• B)Select and examine receiving reports and ascertain that the related canceled checks are dated no later than the receiving reports.
• C)Select and examine canceled checks and ascertain that the related receiving reports are dated no earlier than the checks.
• D)Select and examine canceled checks and ascertain that the related receiving reports are dated no later than the checks.

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Definitions:

Kinked-demand Model

An economic theory that predicts prices in certain competitive markets will remain stable despite economic pressures that would normally cause prices to fluctuate.

Allocative Efficiency

The state of resources being allocated in a way that maximizes the welfare or utility of consumers according to their preferences.

Productive Efficiency

A condition where an economy or firm produces goods or services at the lowest possible cost, utilizing resources in the best way possible.

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