Which of the following could signal internal control problems within the accounting system?
(1) Safeguarding inventory in a locked warehouse
(2) Abuse of alcohol or drugs
(3) Gaps in transactions numbers
(4) Operating style of management
(5) Sudden increase in slow payments

A) 1 and 2
B) 3 and 5
C) 2 and 4
D) 1 and 3

Question

Which of the following could signal internal control problems within the accounting system? 
(1) Safeguarding inventory in a locked warehouse
(2) Abuse of alcohol or drugs
(3) Gaps in transactions numbers
(4) Operating style of management
(5) Sudden increase in slow payments
 
A) 1 and 2
B) 3 and 5
C) 2 and 4
D) 1 and 3

Quizplus · Accepted Answer

(1) Safeguarding inventory in a locked warehouse indicates that adequate physical control measures are being taken.
(2) Abuse of alcohol or drugs is a behavioral issue that can affect decision-making and employee performance, potentially leading to internal control problems.
(3) Gaps in transaction numbers suggests that some transactions may not have been recorded, indicating a breakdown in internal controls.
(4) Operating style of management may impact the culture of compliance within an organization, but it does not necessarily indicate internal control problems.
(5) Sudden increase in slow payments could indicate issues with the creditworthiness of customers or problems with the billing and collection process, but it is not necessarily indicative of internal control problems.

Which of the Following Could Signal Internal Control Problems Within