- 1 Marks
AA – L2 – SA – Q5.6 – Internal Control Components
Question
Select the appropriate component of a system of internal controls for each of the below examples.
- The authorizing of inventory write-offs prior to inventory being scrapped.
- The preparation of a reconciliation between the receivable’s ledger control account and the receivables ledger
A Control environment
B Control activity
C Information system and communication
D Information system and communication
E Control environment
F Control activity
Answer
B, F
Explanation:
- Authorizing inventory write-offs is a control activity, as it involves specific actions to ensure proper financial reporting (B).
- Preparing a reconciliation between the receivables ledger control account and the ledger is also a control activity, ensuring accuracy of financial records (F). Control environment and information system components involve broader aspects, not specific actions. B and F are correct.
- Tags: Control Components, ICAG, Internal controls, Inventory, Receivables
- Level: Level 2
- Uploader: Salamat Hamid