265 correct answer d retail partners would benefit

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265. Correct answer d. Retail Partners would benefit from all of these benchmarking techniques as all would identify best practices. 266. Correct answer a. Option A does not compare the business unit to any other standard, e.g., best practice, and is not an example of benchmarking standards. 267. Correct answer c. Prevention costs include Design Engineering ($300,000), Supplier Evaluation ($240,000), and Labor Training ($150,000) for a total of $690,000. All of these activities would likely take place prior to production to improve quality and prevent costly errors. 268. Correct answer b. Appraisal costs are incurred to detect individual units that do not conform to specifications, e.g., inspecting raw materials. 269. Correct answer b. Appraisal costs are incurred to detect individual units that do not conform to specifications, e.g., product testing costs. 270. Correct answer d. External failure costs are incurred by non-conforming products after shipment to customers. Product field testing would occur during the design phase and therefore prior to shipment. 271. Correct answer a. Internal failure costs are incurred by non-conforming products prior to shipment, e.g., the cost to rework defective units. Section E: Internal Controls 272. Correct answer d. One of the main objectives of internal controls is to provide reasonable assurance of reliability of financial reporting (financial statement assertions).
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147 273. Correct answer d. The benefits of internal controls must always exceed the costs of implementing them. Implementing a system of absolute assurance is overly costly; thus only reasonable assurance can be obtained. 274. Correct answer c. Cashier prepares deposit slip for all cash receipts received. This action involves two functions that are not segregated: custody of assets and recording of transactions. In addition, the summary is not done in a timely manner. 275. Correct answer d. In order to properly segregate duties within the computer department, the responsibility to reprocess the errors detected during processing of the data should be given to the data control group and not to department manager, who should have access to review transactions, but not process transactions; nor to systems analyst, who should have access to view and analyze transactions, but not process transactions, and not to the computer programmer, who should have access to programs, not transactions. 276. Correct answer b. Direct deposit of pay in lieu of distribution of physical paychecks is an example of an effective safeguarding control that limits access to the organization’s assets to authorized personnel. 277. Correct answer a. Policies of strong internal control, segregation of duties, and requiring employees to take vacations is an effective way of deterring fraud. In addition, periodic rotation of employees would also strengthen the control. These practices help prevent collusion and decrease the opportunity for employees to hide fraudulent behavior.
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