Which of These Controls Would Be the Most Effective in Assuring

question 56

Multiple Choice

Which of these controls would be the most effective in assuring that the proper custody of assets in the investing cycle is maintained?

• A) The purchase and sale of investments are executed on the specific authorization of the board of directors.
• B) The recorded balances in the investment subsidiary ledger are periodically compared with the contents of the safety deposit box by independent personnel.
• C) Direct access to securities in the safety deposit box is limited to only one corporate officer.
• D) Personnel who post investment transactions to the general ledger are not permitted to update the investment subsidiary ledger.

---

Definitions:

Normal Balance

The side (debit or credit) where the balance of an account usually increases.

Account Category

A classification within accounting used to group similar types of accounts, such as assets, liabilities, equity, revenue, and expenses.

Accounts Receivable Subsidiary Ledger

is a detailed ledger showing individual transactions and balances for customers who owe money to the business, supplementing the general ledger.

Control Account

A general ledger account that summarizes and controls the total amounts recorded in subsidiary ledgers.