What Is the Concept Behind Separation of Duties in Establishing

question 12

Multiple Choice

What is the concept behind separation of duties in establishing internal controls?

• A)The company's financial accountant should not share information with the company's tax accountant.
• B)Duties of middle-level managers should be clearly separated from those of top executives.
• C)Employee fraud is less likely to occur when access to assets and access to accounting records are separated.
• D)The external auditors of the company should have no contact with managers while the audit is taking place.

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Definitions:

Dividend Payable

A liability recorded on a company's balance sheet for dividends that have been declared but not yet paid to shareholders.

Dividend Receivable

The amount due to shareholders from declared dividends by the company in which they hold shares, recognized as an asset on the balance sheet until paid.

Elimination

The process of removing intercompany transactions when consolidating financial statements of a group.

Consolidation

The process of combining the financial statements of multiple subsidiaries with those of the parent company to present as a single entity.