A General Rule That Should Be Followed When Developing Control

question 9

Multiple Choice

A general rule that should be followed when developing control procedures for a company's assets is:

• A)The cost of the control procedure will likely exceed the procedure's benefit
• B)The procedure should not be designed and implemented unless an asset's cost exceeds $5,000
• C)The more liquid an asset is, the greater the risk of its misappropriation
• D)The procedure should not be designed and implemented in situations where a risk assessment has been previously performed

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Definitions:

Capital Contributions

Funds or assets contributed to a company or partnership by owners or partners to increase its capital stock or equity.

Net Income

The net income of a company once all costs, taxes, and expenses are deducted from the total revenue.

Personal Use

The use of an asset or product for individual rather than commercial or professional purposes.

Capital Contributions

Funds or assets contributed to a company by owners or shareholders, typically used to fund business operations or expansion.