A Physical Count of Inventory Is Required Even Though the Company

question 105

Multiple Choice

A physical count of inventory is required even though the company uses the perpetual inventory system.What internal activity control is this an example of?

• A) segregation of duties
• B) safeguarding of assets and records
• C) checks on recorded amounts
• D) clearly defined authority and responsibility

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Definitions:

Obligee

The party in a contract who is entitled to receive a performance or service from another party (the obligor).

Donee Beneficiary

A donee beneficiary is someone who benefits from a contract in which the promisor agrees to give a gift or confer a benefit to the beneficiary.

Promisor

The party in a contract who has made a promise to perform an action or service for the other party, known as the promisee.

Donee Beneficiary

A third party that benefits from a contract between two other parties, especially in cases where a party promises to make a gift or confer a benefit to someone who is not a party to the contract.