Important Objectives of a System of Internal Controls Are to Safeguard

question 59

Essay

Important objectives of a system of internal controls are to safeguard assets and to enhance the accuracy and reliability of the accounting records. Briefly discuss how (1) cost-benefit considerations, (2) the human element, and (3) the size of the business affect the implementation of a system of internal controls.

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Definitions:

Technological Advance

The progress in technological development that leads to more efficient processes, products, or services.

Productive Capital

Resources such as machinery, tools, and buildings used in production to generate wealth.

MP/P

The ratio of marginal product to price, often used to optimize production levels in economic analysis.

Factor Markets

The venues where services of the factors of production, such as labor, capital, and land, are bought and sold.