Of the Following Statements About an Internal Control System,which One

question 74

Multiple Choice

Of the following statements about an internal control system,which one is correct?

• A) The maintenance of the system of internal control is an important responsibility of the internal audit function.
• B) Administrative controls relate directly to the safeguarding of assets.
• C) Because of the cost/benefit relationship, tests of controls may be applied on a test basis in some circumstances.
• D) Well designed internal control activities always prevent collusion among employees.

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Definitions:

Work In Process Inventory

The direct materials costs, the direct labor costs, and the applied factory overhead costs that have entered into the manufacturing process but are associated with products that have not been finished.

Work In Process Inventory

The value of unfinished goods in the production process at a given point in time.

Conversion Costs

The combination of labor costs and overhead expenses involved in transforming materials into finished goods.

Factory Overhead

Indirect costs associated with manufacturing, such as utilities, maintenance, and manager salaries, not directly traceable to specific units of production.