Which of the Following Situations Indicates a Potential Material Weakness

question 48

Multiple Choice

Which of the following situations indicates a potential material weakness in internal control over acquisitions and expenditures?

• A)Purchase orders are not prepared for services that are acquired directly under authorization of department heads.
• B)The person who approves purchases also signs the cheques.
• C)Unacceptable goods are not recorded on receiving reports.
• D)The person who signs the cheques also stamps "paid" on the vouchers.

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Definitions:

Landlord

An individual or entity that rents out real estate to tenants.

Deferred Revenue

Money received by a company for goods or services which have not yet been provided, recorded as a liability on the balance sheet until the services are rendered or goods are delivered.

Adjusting Entry

A journal entry made at the end of an accounting period to update the accounts and ensure they reflect all revenues earned and expenses incurred during the period.