Which of the Following Is a Weak Internal Control Over

question 103

Multiple Choice

Which of the following is a weak internal control over cash collections from receivables?

• A) The credit department should have no access to cash.
• B) A credit department should evaluate customers' credit applications to determine whether they meet the company's approval standards.
• C) A company should have written approval standards for processing customers' credit applications.
• D) In order to avoid losing sales, all customers' credit applications should be approved.

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Definitions:

Weighted Average Method

A cost accounting method that calculates the cost of goods sold and ending inventory based on the weighted average cost of all items available for sale.

Lotions and Cosmetic Manufacturer

A type of business that specializes in producing health and beauty products, including creams, lotions, and makeup.

Job Order Cost System

An accounting system used to track the costs related to a specific job or batch of goods.

Process Cost System

An economic tracking system utilized for attributing costs to analogous products manufactured in large quantities and in a steady flow.