Question

From a cash receipts standpoint, mandating that a single designated employee is authorized to handle cash receipts (at the counter or via the mail) is an example of the control activity:___________

A) Human resource controls
B) Independent internal verification
C) Establishment of responsibility
D) Segregation of Duties

Answer 1

Answer: C) Establishment of responsibility

Step-by-step explanation:

Establishment of responsibility is an internal control method that works by assigning one person the role and responsibility of mangling an activity.

This way it is easier to monitor the way that activity is done and the resources attached to it because with only one person having access, any unexplained events can be queried from the person who's sole responsibility it was to look after the activity the event occurred in.

In this scenario for instance, if the cash receipts are found to be missing in any way, the first person that will be questioned is the employee who was solely authorized to handle cash receipts (at the counter or via the mail).