Indicate Whether Each of the Following Statements Regarding Internal Controls

question 137

Short Answer

Indicate whether each of the following statements regarding internal controls is true or false.
_____ a) Separation of duties is an internal control feature that requires different individuals to perform the following functions: authorization, recording, and custody of assets.
_____ b) Under proper internal controls, the person who collects customer payments should also maintain the records of cash receipts.
_____ c) Under proper internal controls, those who are given authority should not bear the corresponding responsibility.
_____ d) One of the basic rules of internal control is to require employees to take regular vacations.
_____ e) A fidelity bond is a form of insurance that companies buy to protect themselves from loss due to employee dishonesty.

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Definitions:

Sales Discounts

Reductions from the listed price given by a seller to a buyer as an incentive to purchase.

Expense Accounts

These accounts are used to track the money spent or costs incurred in a company's operations.

Sales Discount

A reduction in the price charged to customers, typically given in exchange for prompt payment.

Discount Period

The discount period refers to the time frame in which a payment can be made at a reduced rate, typically in the context of early payment incentives to debtors.