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:

Supply Decreases

A situation in which the quantity of a product or service that producers are willing and able to sell at all possible prices falls.

Demand Increases

A situation where there is a rise in the quantity of a product or service that consumers are willing and able to purchase at a given price.

Equilibrium Price

The price at which supply and demand for a product or service balance, leading to an stable market condition.

Supply Declines

A situation where the quantity of a good or service that producers are willing to sell at a given price decreases.