Which of the Following Is True of Good Internal Controls

question 45

Multiple Choice

Which of the following is true of good internal controls over payroll?

• A)Accounting for payroll should be separate from hiring and firing of employees.
• B)Disbursement of paychecks should not be separate from the function of maintaining payroll records.
• C)Hiring and firing employees should not be separated from accounting and from passing out paychecks.
• D)Cash receipts from customers should be separated from the accounting for accounts receivable.

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Definitions:

EOQ Inventory System

The Economic Order Quantity (EOQ) model is a formula used to determine the optimal quantity of inventory to minimize total inventory costs including holding and ordering costs.

Safety Stock

Inventory kept on hand to protect against shortages due to fluctuations in demand or supply.

Carrying Cost

The total cost of holding inventory, including storage, insurance, and taxes, over a certain period.

Average Inventory Levels

The mean stock of goods held by a company over a certain period, used to manage inventory efficiently and minimize holding costs.