Lapping of Accounts Receivable by an Employee Is Not Possible

question 27

True/False

Lapping of accounts receivable by an employee is not possible when there is adequate segregation of duties with respect to cash disbursements.

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Definitions:

Investing Activities

Transactions involving the purchase and sale of long-term assets and investment securities, reflected in a company's cash flow statement.

Direct Method

A cost allocation approach directly assigning service department costs to producing departments without any intermediate steps.

Sales Adjusted

The revision of sales figures to account for returns, allowances for damaged goods, and discounts given.

Cash Basis

An accounting method where transactions are recorded when cash is received or paid, without regard to when the transactions occurred.