Question

Ch7/Financial Accounting

Please, I need to get answered to the following:( 100 words for each part).

1. Describe physical controls, independent internal verification, and human resource controls. For each internal control principle, explain what weaknesses are being prevented for the company.

2. “Describe” the Ch6 – inventory turnover and days in inventory ratios. Explain the importance of each ratio and how each ratio assists the investor in evaluating a company’s performance.

Answer 1

Answer for 1)

Physical controls as the name indicates controlling physical assets,computer system,file etc from unauthorised access. It is performed to safegaurd assets and prevent unauthorised data access.

Internal verification is done to provide internal quality assurance.It is performed for complying with standards while in assessments.

Human resources controls are controls to verify whether employees of the organization is compling with rules and regulations of the organisations.It acts as disciplinary controls on employee which make them hesitate to commit fraud.

Answer for 2)

Inventory turnover ratio is a ratio which used to find that how many times a company sold or replaces it's inventory during an year.It is obtained by dividing cost of sale sby average of opening and closing stock.It helps the investor in finding how efficiently does the company works than its compitetor.

Days in turnover ratio will be obtained to see by devindimg no. of days in year by inventory turnover ratio which is used to calculate number days it takes to sell inventory in hand.The lower the days the efficient the sales.It helps investor to evaluate the company sales performance in days as the sales are the major revenue for the company which gives the investor the income.