Which of the following is NOT an element of internal controls to guarantee the e

Question

Which of the following is NOT an element of internal controls to guarantee the existence of inventory? a- Disposals of inventory must be recorded timely b. Warehouse must be safeguarded C. Inventory count must be performed semiannually d. Price discounts must be approved by the CEO QUESTION 22 Which is NOT the reason that maintenance expenses should be examined? a- Capitalization of maintenance expense is often used for fraudulent financial reporting Maintenance parts that are purchased should have the best quality d. Maintenance expense can be significant for companies in certain industries QUESTION 23 Which of the following is NOT an inherent risk associated with inventory? a Inventory costing methods frequently change from one year to the next Inventory may become obsolete C-Inventory is easily transportable d. Inventory accounts typically have a high volume of activity

Explanation / Answer

21):-- (D) Internal Controls are to be an integral part of any organization's financial and business policies and procedures. Internal controls consists of all the measures taken by the organization for the purpose of; (1) protecting its resources against waste, fraud, and inefficiency; (2) ensuring accuracy and reliability in accounting and operating data; (3) securing compliance with the policies of the organization; and (4) evaluating the level of performance in all organizational units of the organization. Internal controls are simply good business practices.

22):-- (B):- Keeping track of expenses is important for small businesses. Recording and regularly reviewing your business expenses gives you a good idea of the revenue earned against the money spent. It helps you pinpoint unnecessary expenditures and know when it’s time to cut costs to maintain profitability. Ultimately, this helps small business owners plan for the future with more clarity and confidence.

23):- (C) :--At every step of an audit, you have to consider risks and their associated controls. At this inventory stage, your focus is on identifying risks that exist in the inventory management process and the internal controls the company has established to offset those risks.

three inherent inventory management risk factors:

1:-Susceptibility to theft.

2:-Complexity of the year-end inventory procedure

3:-Prior-period misstatements

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