Of the Following Statements About Internal Control, Which One Is

question 5

Multiple Choice

Of the following statements about internal control, which one is not valid?

• A) No one person should be responsible for the custodial responsibility and the recording responsibility for an asset.
• B) Transactions must be properly authorized before such transactions are processed.
• C) Because of the cost/benefit relationship, a client may apply control procedures on a test basis.
• D) Control activities reasonably insure that collusion among employees cannot occur.

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Definitions:

Preexisting Contract

An agreement that was already in place before certain actions were taken or before a dispute arose.

Modification

The act of making changes or alterations to something, such as a document or agreement, often to improve it or make it more suitable.

Past Consideration

Refers to something given or an action that has been taken in the past, which cannot legally serve as a consideration for a present contract.

Statute of Limitations

A legal rule setting the maximum time period in which certain actions can be brought to court or certain rights enforced, after which claims are barred regardless of merit.