The Following Set of Items Describes Activities Completed by a Company

question 71

Multiple Choice

The following set of items describes activities completed by a company in purchasing and paying for merchandise.For each activity,identify whether or not the activity adheres to or violates sound internal control procedures.
- Although the department supervisor can indicate a preferred supplier or vendor on purchase requisitions,the purchasing department has the responsibility for making the final decision on a vendor.

• A)Adheres to sound internal control procedures
• B)Violates sound internal control procedures
• C)Neither strengthens nor violates internal control

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Definitions:

Cost of Capital

The essential profit rate that companies need to hit on their investments to uphold their value in the market and attract capital.

Capital Budgeting

The process a business undertakes to evaluate and select long-term investments that are consistent with the firm's goal of wealth maximization.

Equity Financing

The method of raising capital by selling company shares to investors; in return, the investors receive ownership interests in the company.