The Most Effective Internal Control Procedure to Prevent or Detect

question 55

Multiple Choice

The most effective internal control procedure to prevent or detect the creation of fictitious credit memoranda for sales returns is to

• A)supervise the accounts receivable department
• B)limit access to credit memoranda
• C)prenumber and sequence check all credit memoranda
• D)require management approval for all credit memoranda

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Definitions:

Departmental Predetermined Overhead Rates

Overhead rates set in advance for each department, used to allocate overhead costs more accurately based on department-specific drivers.

Manufacturing Overhead

All manufacturing costs other than direct materials and direct labor, including costs such as depreciation, electricity, and salaries for managers.

Job F

A designation for a particular task, assignment, or project within an organization, specified as "Job F" for identification.

Machine-Hours

refers to the total number of hours that machinery is in operation during a specific period, used in calculating machine-related expenses or allocations.