Which of the Following Controls Would Be Most Successful in Mitigating

question 8

Multiple Choice

Which of the following controls would be most successful in mitigating the theft of customer checks received in the mail?

• A)Custody of receipts by the accounts receivable manager.
• B)Restrictive endorsements placed on checks as soon as they arrive.
• C)Weekly deposits to a secure bank.
• D)Reconciliation of bank accounts each month.

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Definitions:

Interest Tax Shield

The savings in taxes achieved by deducting interest payments on debt from taxable income.

Financial Risk

The possibility of losing money on an investment or business venture, usually due to changes in market conditions or poor financial management.

Levered Firms

Companies that use debt in addition to equity in their capital structure.

Unlevered Firms

Companies that operate without the use of borrowed money or financial leverage.