A Good Internal Control Feature Is to Have a Written

question 4

True/False

A good internal control feature is to have a written hiring authorization form completed before a new employee is added to the payroll.

Analyze and calculate cash flows from customer transactions.

Understand the impact of credit card sales and discounts on financial statements.

Recognize effective internal controls for cash management.

Understand the classification and reporting of cash equivalents on the balance sheet.

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Definitions:

Expected Rate of Return

The projected percentage return on an investment over a given period, factoring in all known variables.

Beta

A measurement of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.

Capital Market Line

A theoretical line representing the risk versus return of the market of all investable assets, assuming risk-free borrowing and lending rates.

Security Market Line

A representation of the capital asset pricing model which shows the relationship between risk (as measured by beta) and expected return of investments.