Which of the Following Internal Control Mechanisms Would Be the Most

question 28

Multiple Choice

Which of the following internal control mechanisms would be the most difficult for a small company to implement?

• A) Limiting access to valuable inventory to as few employees as possible
• B) Screening potential employees before hiring
• C) Requiring all employees to take one week of vacation per year
• D) Developing a code of conduct addressing ethical and legal issues
• E) Having several employees involved with each transaction, decision, or organizational issue

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Definitions:

Arithmetic Average

The sum of values divided by the number of values, used for calculating the mean.

Security Market Line

A graphical representation in finance that shows the expected return of assets or portfolios as a function of their risk (beta), according to the Capital Asset Pricing Model.

Expected Return

is the average return anticipated on an investment, factoring in the probability of each possible outcome.

Beta Coefficient

A measure of a stock's volatility in relation to the overall market, indicating the stock's risk compared to the market average.