Question

Which of the following is an internal control weakness for a company whose inventory of supplies consists of a large number of individual items? Multiple Choice The warehouse manager is responsible for maintenance of perpetual inventory records. Perpetual inventory records are maintained only for items of significant value. The cycle basis is used for physical counts. Supplies of relatively little value are expensed when purchased.

Answer 1

Answer: Perpetual inventory records are maintained only for items of significant value.

Explanation:
The following option is an internal control weakness for a company whose inventory of supplies consists of a large number of individual items:

Perpetual inventory records are maintained only for items of significant value.

This choice represents a potential internal control weakness because it suggests that the company is not accurately tracking its inventory of supplies for all items, only for those of significant value. This could lead to incomplete and inaccurate inventory records, making it difficult to monitor and control the usage of all supplies effectively. It increases the risk of errors, mismanagement, and even potential misappropriation of supplies that are not being adequately tracked.

In contrast, maintaining perpetual inventory records for all items, regardless of their value, would provide a better control mechanism to ensure accurate and up-to-date records of inventory levels. This would enhance the company's ability to manage its inventory efficiently, detect discrepancies, and prevent any potential issues related to supply usage and theft.