Of the Following Control Activities, Which Is the MOST Effective

question 48

Multiple Choice

Of the following control activities, which is the MOST effective for minimizing the possibility of fraudulent activity?

• A) Bonding of employees.
• B) Segregation of duties.
• C) Rotation of assignments.
• D) Enforced vacations.

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Definitions:

Rationing Function

The ability of market prices to allocate scarce resources efficiently among competing uses.

Incentive Function

The inducement that an increase in the price of a commodity gives to sellers to make more of it available (and conversely for a decrease in price), and the inducement that an increase in price offers to buyers to purchase smaller quantities (and conversely for a decrease in price).

Loan Period

The duration of time from the initiation of a loan to its final due date, within which the borrower is expected to repay the borrowed amount along with interest.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed as an annual percentage rate.