Which of the following is the most severe?
a. Material weaknesses in internal control.
b. Significant deficiencies in internal control.
c. Operational deficiencies in internal control.
d. Each is equally severe because it could result in inaccuracies in financial reporting.
a
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When the allowance method of recognizing bad debt expense is used, the entries at the time of collection of a small account previously written off would
a. increase net income. b. increase the allowance for doubtful accounts. c. decrease net income. d. decrease the allowance for doubtful accounts.
List two ratios that are measures of solvency
Under the 1934 Act, an issuer must register with the SEC if
a. it has not completed a public offering under the 1933 Act. b. its securities are not going to be traded on a national exchange. c. it will not be providing investors with a prospectus. d. it has at least 2,000 shareholders and total assets that exceed $10 million.
Nick steals two checks from Pauline-a blank check and a check payable to the order of Retail Outlets Company, drawn on Pauline's account with State Bank. Nick forges Pauline's sig-na-ture on the blank check and makes it payable to himself. Nick forges
Retail Outlets's indorsement on the back of the check payable to Retail Outlets, and adds "Pay to the order of Nick." At United Credit Union, Nick indorses the back of both checks with his own name and gives them to United for cash. United does not know about the theft or the forged signatures and presents the checks to State Bank, which pays them. Pauline, who was not negli-gent, discovers the forgeries and asks State Bank to recredit her ac-count. Who suffers the loss on each check?