Which of the Following Poses an Internal Control Problem

question 49

Multiple Choice

Which of the following poses an internal control problem?

• A)Physical inspection of inventory quantity and condition is outsourced to a firm that specializes in this service.
• B)Products are released from inventory after a warehouse employee and a shipping clerk both sign the pick list.
• C)Sales representatives have authority to increase customers' credit limits in $1,000 increments.
• D)When customer payments are received in the mail,checks are sent to the cashier's office and remittance advices are sent to the accounts receivable department.

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Definitions:

Market Value

The prevailing cost at which an asset or service can be traded or acquired.

Face Value

The nominal or dollar value printed on a financial instrument like a bond or stock certificate.

Premium

An amount paid for an insurance policy or an amount above the nominal value of a security or investment.

Market Rates

The prevailing interest or exchange rates in the financial markets at any given time.