Payments by Check Is an Important Internal Control for All

question 13

Multiple Choice

Payments by check is an important internal control for all of the following reasons EXCEPT for:

• A) the checks provided a record of the payment.
• B) the check must be signed by an authorized official.
• C) all payments are made via a lock-box system.
• D) before signing the check, the authorized official should study the evidence supporting the payment.

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Definitions:

Gain on Sale

Profit realized from the sale of assets or investments when the selling price exceeds the book value.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenues.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board that is becoming the global standard for the preparation of public company financial statements.

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting used in the United States.