Which of the Following Poses an Internal Control Problem

question 2

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 sign the pick list.
• C)Sales representatives set up new customer accounts and determine their credit limits.
• D)When payments are received,they are sent to the cashier's office and remittance data are sent to the accounts receivable department.

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Definitions:

Minimum Cash Balance

The lowest amount of cash that a company aims to hold in its accounts to ensure financial stability and operational efficiency.

Pledged Financing

Financing obtained by offering assets as collateral to secure the loan, reducing the lender's risk.

Assignment Of Receivables

The transfer of a company's right to receive money from a debtor to another party.

Accounts Receivable Period

The mean duration a company requires to receive payments from its clients following a sale.