Question

Which of the following are control features that should be established over inventory? (Select all that apply.)

O Separation of responsibilities for inventory accounting and physical handling of inventory
O Protecting inventory from theft and damage
O Maintaining periodic inventory records
O Comparing perpetual records to periodic physical counts of inventory

Answer 1

Control features over inventory include separation of responsibilities, protection against theft and damage, maintaining inventory records, and regular comparisons between records and physical counts to ensure precise inventory management.

Step-by-step explanation:

The control features that should be established over inventory include:

• Separation of responsibilities for inventory accounting and physical handling of inventory
• Protecting inventory from theft and damage
• Maintaining periodic inventory records
• Comparing perpetual records to periodic physical counts of inventory

Implementing these controls is vital to ensure the accuracy and integrity of inventory management. Separation of responsibilities helps to prevent fraud or theft by dividing tasks related to inventory among different employees. Protecting inventory from theft and damage not only preserves the assets of a company but also ensures that the inventory counts are accurate. Regularly updating inventory records, whether periodically or perpetually, guarantees that the financial records are up to date. Comparisons between recorded inventory and physical counts uncover discrepancies early on and allow for prompt corrective measures.