An Effective System of Internal Control Is Critical to Protecting

question 154

Essay

An effective system of internal control is critical to protecting a company's investment in cash. Identify the five control activities and provide one example that relates to each control as it would be applied to cash.

---

Definitions:

Par Value

A nominal value assigned to a security, such as a share of stock, representing its legal capital per share.

Retained Earnings

Profits that a company has decided to re-invest in the business instead of paying out to shareholders as dividends.

Liquidating Dividend

A type of dividend paid by a company to its shareholders from its capital rather than its earnings, typically during the partial or full liquidation of the company.