20. What is the concept behind separation of duties in establishing internal con
ID: 2537176 • Letter: 2
Question
20. What is the concept behind separation of duties in establishing internal controls? A. The company's financial accountant should not share information with the company's tax accountant. B. Duties of middle-level managers should be clearly separated from those of top executives. C. Employee fraud is less likely to occur when access to assets and access to accounting records are separated. D. The external auditors of the company should have no contact with managers while the audit is taking place. 21. A company receives a S50,000 cash deposit from a customer on October 15 but will not provide services until November 20. Which of the following statements is true? A. The company records service revenue on October 15. B. The company records cash collection November 20. C. The company records deferred revenue on October 15. D. The company records nothing on October 15. 22. The purchase of an asset using credit (on account) A. Increases assets and stockholders' equity. B. Increases assets and liabilities. C. Decreases assets and increases liabilities. D. Leaves total assets unchanged. 23. The idea that all expenses incurred in generating revenues should be recognized in the same period as those revenues is called the: A. Time-period concept. B. Conservatism. C. Matching principle. D. Revenue recognition principle. 24. Under accrual-basis accounting: A. Revenue should be recognized in the period the cash is received. B. Revenue should be recognized in the period earned. C. Revenue should be recognized in the balance sheet D. Revenue is a component of common stockExplanation / Answer
Answer 20 :
The concept behind separation of duties in establishing internal controls is segregating of duties of main function from different employees :
C. Employees fraud is less likely to occur when access to assets and accounting record is separated
Answer 21:
C : Company record deferred revenue on October 15.
If Company receives any deposit before rendering the services will be treated as deferred revenue.
Answer 22:
The treatment for Purchasing any assets using credit will Increase the Asset & increase the Creditors also (Liability)
B. Increases Assets & Liabilities
Answer 23:
The idea that all expenses incurred in generating revenues should be recognized in the same period as those revenue is called the :
D. Revenue Recognition Principle
Answer 24
Under accrual basis accounting :
A. Revenue should be recognized in the period the cash is received
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