Obtaining an Understanding of an Internal Control Involves Evaluating the Design

question 29

Short Answer

Obtaining an understanding of an internal control involves evaluating the design of the control and determining whether the control has been:
A. Authorized.
B. Implemented.
C. Tested.
D. Monitored.

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Definitions:

Wage Expense

The total amount spent by a business on salaries and wages for its employees.

Post-Closing Trial Balance

A list of all accounts and their balances after closing entries are made, showing only balance sheet accounts.

Temporary Accounts

Accounts that are closed at the end of each accounting period. These include revenue, expense, and dividend accounts.

Permanent Accounts

Accounts that carry their ending balances over to the next accounting period and are not closed out.