Homework Answers
(Q) Which of the following statements about maintaining a strong system of internal control is true?
(Ans) Option :- (C) - Numeric controls such as pre-numbered documents.
- Documentation provides evidence of the underlying transactions. It is the input to establishing proper financial records. Financial documents should be pre-numbered to ensure all transactions are recorded and accounted for. This will help to prevent recording of the same transaction twice, as there should not be any duplicate numbers in your system. With proper numbering of documentation, tracing documents that relate to follow up queries/claims and questions from customers or owners of prior transactions will be easy. Therefore Numeric controls like pre-numbered documentation indicates a strong system of internal control and it will reduce the risk of a material misstatement.
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