If a manufacturing company's inventory of supplies consists of a large number of small items, which of the following would be considered a weakness in internal controls?
A)Supplies of relatively low value are expensed when acquired.
B)Supplies are physically counted on a cycle basis, whereby limited counts occur quarterly and each item is counted at least once annually.
C)The stores function is responsible for updating perpetual records whenever inventory items are moved.
D)Perpetual records are maintained for inventory items only if they are significant in value.

Question

Quizplus · Accepted Answer

The stores function being responsible for updating perpetual records whenever inventory items are moved is a weakness because it can lead to errors or fraud if not properly segregated from other duties, such as custody or authorization.

If a Manufacturing Company's Inventory of Supplies Consists of a Large