Which of the following is the best internal control over disposals of fixed assets?
A) Periodically analyze the scrap sales revenue and the repairs and maintenance expense accounts.
B) Periodically compare removal work orders and disposal authorization.
C) Separate the duties of the official authorizing a disposal and the official approving removal work orders.
D) Use serial numbers to identify fixed assets that could be sold.

Question

Quizplus · Accepted Answer

Separating the duties of the official authorizing a disposal and the official approving removal work orders ensures that the disposal is authorized by the appropriate person and that the asset is actually removed from the company's premises. This reduces the risk of fraud or error in the disposal process. Periodically analyzing scrap sales revenue and repairs and maintenance expense accounts (A) may help identify potential problems, but it does not ensure proper disposal procedures. Using serial numbers to identify fixed assets that could be sold (D) may be helpful, but does not address the issue of proper authorization and approval for disposal. Periodically comparing removal work orders and disposal authorization (B) is also helpful, but does not ensure proper separation of duties.

Which of the Following Is the Best Internal Control Over