Two or More People Working Together to Circumvent Internal Controls

question 105

Multiple Choice

Two or more people working together to circumvent internal controls and defraud a company is known as:

• A)encryption.
• B)firewalls.
• C)collusion.
• D)separation of duties.

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Definitions:

Perpetual Inventory System

An accounting approach to continuously track inventory levels, purchases, and sales, updating the inventory records in real-time.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated using either a periodic or perpetual inventory system.

Inventory Method

The approach a business uses to value its inventory and determine the cost of goods sold, such as FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).

Gross Profit Ratio

A financial metric used to assess a company’s financial health by dividing gross profit by net sales.