Internal Control Does Not

question 126

Multiple Choice

Internal control does not:

• A)help safeguard the assets a business uses in its operations.
• B)guarantee a company will not go bankrupt.
• C)prevent and detect error and fraud.
• D)promote operational efficiency.

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Definitions:

Minimum Revenue

The lowest amount of revenue that a business must generate to cover its operating expenses and avoid losses.

Operating Segment

A distinct component of a business engaged in activities generating revenues and incurring expenses, whose results are regularly reviewed by the entity's chief operating decision maker.

Revenue Test

A criterion used to evaluate whether an entity's revenue level meets specific thresholds for financial reporting or regulatory compliance purposes.

Operating Segments

Denotes the distinct revenue-producing components of an enterprise, which engage in business activities from which they may earn revenues and incur expenses.