Which of the Following Is Not a Control That Should

question 34

Multiple Choice

Which of the following is not a control that should be established for purchases of equipment?

• A) Establishing a budget for capital acquisitions.
• B) Requiring that the department in need of the equipment order the equipment.
• C) Requiring that the receiving department receive the equipment.
• D) Establishing an accounting policy regarding the minimum dollar amount of purchase that will be considered for capitalization.

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Definitions:

Limited Liability

A legal structure that restricts the amount of money that owners or shareholders can lose in case the company fails, limiting their loss to the amount they have invested in the company.

Direct Management

The process of overseeing and directly controlling operations or tasks without intermediary levels of command.

Charter

A legal document that establishes a corporation or other organization, outlining its purpose, activities, and rights.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation, giving shareholders voting rights.