Question

which situation indicates a weak internal control structure? a. the mail room clerk authorizes credit memos b. the warehouse clerk obtains a signature before releasing goods for shipment c. the record keeping clerk maintains both accounts receivable and accounts payable subsidiary ledgers d. the accounts receivable clerk prepares customer statements every month

Answer 1

The record-keeping clerk maintains both accounts receivable and accounts payable subsidiary ledgers situation indicates a weak internal control structure. The correct option is C.

What are the implications of weak internal control?

According to these studies, businesses with weak internal controls are more likely to have financial reporting errors that lead to poorer accounting quality. Auditor changes are more likely with the audit committee. We can therefore assume that weak internal controls are linked to bad corporate governance.

Without internal controls, a company operates inefficiently, unreliable, and in contravention of all applicable laws and regulations. This typically results in the inability to compare performance to plans and projections.

Thus, the ideal selection is option C.

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