Are signed checks for materials purchased mailed promptly without being returned to the department responsible for processing the disbursement?

Are approved requistions required when materials are released from the company's warehouse into production?

Are vendor invoices for materials purchases approved for payment by someone who is independent of the cash disbursements function?

Are details of payments for materials balanced to the total posted to the general ledger?

Scrap.

Variance reporting.

Rework.

Work-in-process.

448 units

10 units

224 units

317 units

Using a just-in-time system to keep inventory levels at a minimum

Performing regular comparisons of perpetual records with recent costs of inventory items

Performing a match of the purchase request, receiving report, and purchase order before payment is approved

Using physical inventory counts as a basis for adjusting the perpetual records

Supplies are physically counted on a cycle basis, whereby limited counts occur quarterly and each item is counted at least once annually.

Perpetual records are maintained for inventory items only if they are significant in value.

The stores function is responsible for updating perpetual records whenever inventory items are moved.

Supplies of relatively low value are expensed when acquired.

Compare the physical count with the periodic records.

Determine the quantity of inventory in process.

Determine the quantity of inventory sold.

Compare the physical count with the perpetual records.

Increased efficiency and flexibility

Increased sales and cost of sales

Automatic computation of materials requirements

Early error detection and increased accuracy

Material resource planning (MRP)

The economic order quantity (EOQ)

Just-in-time (JIT)

First-in, first-out (FIFO)

JIT

CIMs

CAD/CAM

MRP-II

The purchase of marketable securities

The sale of bonds

The write-off of bad debts

The sale of stock

Source of capital processes will result in potential dividend or interest payments.

These processes should not be initiated unless there is specific authorization by management at a top level.

The fact that these transactions and processes cannot occur without oversight by top management means other controls are not necessary.

Retirement of debt is a source of capital process.

Chief executive officer (CEO).

Treasurer

Controller.

Chief accounting officer (CAO).

Any fraud is likely to involve manipulating capital and investment processes.

Internal controls aimed at preventing and detecting employee fraud in capital and investment processes are not as effective.

Because of top management oversight, the auditor need not review these processes.

Top management fraud, rather than employee fraud, is more likely to occur.

Nonroutine transactions are recorded in a subsidiary ledger.

Routine transactions are recorded in the general journal.

Nonroutine transactions are entered in the general journal.

Nonroutine transactions are recorded in a special journal.

The general ledger maintains details of subaccounts.

Control is enhanced by separating the subsidiary ledger from the general ledger.

Total balances in a subsidiary ledger should always equal the balance in the corresponding general ledger account.

Reconciling a subsidiary ledger to the general ledger can help to detect errors or fraud.