Which of These Is a Fundamental Principle of Internal Control

question 58

Multiple Choice

Which of these is a fundamental principle of internal control to prevent fraud?

• A)Separate duties so that a single person carrying out a series of tasks could not commit fraud and take steps to hide it.
• B)Only permit top management to authorize transactions.
• C)Allow cashiers to collect cash from customers and enter the receipts into the account records.
• D)Allow cashiers to collect cash from customers and deposit the cash on a daily basis into the bank.

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Definitions:

Goodwill Impairment

A reduction in the book value of goodwill on a company's balance sheet, indicating that the value of acquired assets has decreased.

Unrealized Profits

Profits that have been generated on paper through investments but have not actually been realized through a sale or exchange.

Intercompany Transactions

Transactions between entities within the same group that are eliminated in the process of preparing consolidated financial statements to avoid double counting.

Wholly Owned

A company whose entire share capital is 100% owned by another company, making it a complete subsidiary.