PRL Corporation's Internal Control Plan Includes Five Items: (I) Conducting

question 16

Multiple Choice

PRL Corporation's internal control plan includes five items: (i) conducting ongoing evaluations of internal control during the normal course of operations, (ii) hiring accountants who understand the importance of strong internal control, (iii) including a segment in new employee orientation on the importance of strong internal control, (iv) periodic employee surveys that identify new issues that require internal controls, (v) a quarterly newsletter explaining elements of the internal control plan. Which of the following most appropriately groups two items from PRL's plan with a component of the COSO framework?

• A)I and II, monitoring
• B)II and III, control environment
• C)IV and V, information and communication
• D)I and V, risk assessment

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Definitions:

IRR

The Internal Rate of Return; a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Salvage Value

The foreseen market valuation of an asset at the lifespan’s end.

Present Values

The now-value of a forthcoming financial amount or cash flow pattern, discounted at a fixed rate of return.

Net Present Value Method

A financial analysis tool used to evaluate the profitability of an investment by calculating the difference between the present value of cash inflows and outflows.