Which of the following measures the relationship between cost of ...

[kellyjaisingh]

Which of the following measures the relationship between cost of merchandise sold and the amount of inventorycarried during the period?
 a. inventory turnover
  b. fixed asset turnover
  c. retail method of inventory costing
  d. gross profit method of inventory costing

Question 2

Lisa Vogle has been running the Bird's Nest Inn since the death of her husband. Common sense tells Lisa that she should take some action to protect the assets of the business and the financial records.
 
  Explain the basic concepts of internal control to Lisa.
  What will be an ideal response?

[jessicaduplan]

Answer to Question 1

a

Answer to Question 2

Internal controls are the policies and procedures used by a business to protect the assets of a business and to ensure the accuracy and reliability of the accounting records. Business owners and managers use these controls to minimize risk and to maintain control over the operations of a business. Internal controls can be organized into three categories: preventive, detective, and corrective controls.

Preventive controls are designed to prevent an error or irregularity. An example would be keeping cash in locked cash drawers or in a safe. Detective controls are designed to identify when an error or irregularity has occurred. A cash (bank) reconciliation is an example of a detective control. Corrective controls are designed to fix errors. For example, denying credit to a customer who has not paid an account would be a corrective control.