Indicate whether each of the following items regarding internal control is true or false. ________ a) Accounting controls are composed of procedures designed to safeguard assets and ensure accounting records contain reliable information. ________ b) Administrative controls concern the reliability of the financial statements and the accuracy of the general ledger.________ c) Whenever possible, the functions of authorization, recording and custody should be exercised by the same dependable employee.________ d) Cash is most susceptible to embezzlement at the points of receipt and disbursement.________ e) A well-designed internal control system prevents collusion among employees.
What will be an ideal response?
a) T b) F c) F d) T e) T
a) This is true. Accounting controls are composed of procedures designed to safeguard the assets and ensure that the accounting records contain reliable information. b) This is false. Administrative controls are designed to evaluate performance and the degree of compliance with company policies and public laws. c) This is false. Whenever possible, the functions of authorizing, recording, and custody of assets should be performed by separate individuals.
d) This is true. Cash is most susceptible to embezzlement when it is received or disbursed.
e) This is true. A system of internal controls is designed to prevent or detect errors and fraud. However, no control system is foolproof. Internal controls can be circumvented by collusion among employees.
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In the United States, laws do not regulate the licensing process per se as do technology transfer laws in the EU, Australia, Japan, and many developing countries
Indicate whether the statement is true or false
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a. theoretical capacity b. practical capacity c. normal capacity d. expected capacity
The Basketball Division of Thunder Sports Enterprises reported the following financial data for the year: Assets available for use $1,200,000 Book Value $1,500,000 Market Value Residual income $108,000 Return on investment 14% Refer to Thunder Sports Enterprises. If expenses increased by $15,000 in the Basketball Division,
a. return on investment would decrease. b. residual income would increase. c. the target rate of return would decrease. d. asset turnover would decrease.