Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Five Components of Internal Controls

Financial Accounting

6. Internal Controls and Reporting Cash

Five Components of Internal Controls

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Multiple Choice

Which of the following best describes the concept behind separation of duties in establishing internal controls?

Allowing one employee to handle all accounting tasks to increase efficiency.

Implementing physical barriers to prevent unauthorized access to assets.

Requiring management approval for all transactions regardless of size.

Dividing responsibilities among different employees so that no single individual controls all aspects of a financial transaction.

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Verified step by step guidance

Understand the concept of 'separation of duties' in internal controls. This principle ensures that no single individual has control over all aspects of a financial transaction, reducing the risk of errors or fraud.

Analyze the options provided in the question. Eliminate choices that do not align with the definition of separation of duties.

Option 1: 'Allowing one employee to handle all accounting tasks to increase efficiency' contradicts the principle of separation of duties, as it centralizes control.

Option 2: 'Implementing physical barriers to prevent unauthorized access to assets' relates to physical security, not the division of responsibilities.

Option 3: 'Requiring management approval for all transactions regardless of size' focuses on authorization but does not address the division of tasks. The correct answer is the option that emphasizes dividing responsibilities among employees to ensure no single individual controls all aspects of a transaction.