Which Situation Indicates an Internal Control Risk in the General

question 28

Multiple Choice

Which situation indicates an internal control risk in the general ledger/financial reporting systems (GL/FRS) ?

• A)the employee who maintains the cash journal computes depreciation expense
• B)the cash receipts journal voucher is approved by the Treasurer
• C)the cash receipts journal vouchers are prenumbered and stored in a locked safe
• D)the employee who maintains the cash receipts journal records transactions in the accounts receivable subsidiary ledger

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Definitions:

GAAP

Generally Accepted Accounting Principles, a common set of accounting principles, standards, and procedures that companies must follow when they compile their financial statements in the U.S.

Fair Value

The price at which an asset would be exchanged between knowledgeable, willing parties in an arm's length transaction.

Full IFRS

The complete set of International Financial Reporting Standards that are globally accepted guidelines for preparing financial statements.

Private Company

A business entity owned by private individuals or entities and not traded publicly on the stock exchange, often characterized by closely held ownership.