The Preventative Controls Within a Company's Internal Control System

question 28

Multiple Choice

The preventative controls within a company's internal control system:

• A)Form the foundation for all of a company's other internal control components
• B)Focus on management's philosophy and operating style
• C)Ignore the risk factor associated with a company's control procedures
• D)Relate to safeguarding a company's assets and checking the accuracy and reliability of the company's accounting data

---

Definitions:

Total Revenue

The total amount of money received by a firm from sales of its products or services before any expenses are subtracted.

Average Product

The output per unit of input, for example, the average quantity of product produced per worker or per machine.

Marginal Product

The additional output that results from using one more unit of a variable input, holding all other inputs constant.

Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot increase proportionally.