As a Form of Internal Control Within the Acquisition

question 15

Multiple Choice

As a form of internal control within the acquisition / payment process, internal auditors are most likely to:

• A)Prevent or detect a problem.
• B)Prevent or correct a problem.
• C)Detect or correct a problem.
• D)None of the above; internal auditors are not a form of internal control for the acquisition / payment process.

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Definitions:

Net Income

The ultimate earnings of a corporation after reducing total income by any expenses, taxes, and costs.

Prior Period Adjustments

Adjustments made to correct financial statements of previous periods due to errors or changes in accounting policy, ensuring accuracy in current financial reporting.

Statement Of Retained Earnings

A financial document that shows how a firm's earnings are reinvested in the business or paid out to shareholders.

Multiple-step

An income statement format that shows several steps to determine net income, including gross profit, operating income, and other income and expenses.