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.

Question

Quizplus · Accepted Answer

b)False c)False d)True e)F. 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 false. 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.

Indicate Whether Each of the Following Items Regarding Internal Control