A System of Internal Control Can Only Provide Reasonable Assurance

question 65

Multiple Choice

A system of internal control can only provide reasonable assurance, which is based on the belief that

• A) the system is infallible.
• B) the system can always detect errors and irregularities.
• C) the costs of establishing control activities should not be greater than their expected benefit.
• D) the human element is not important.

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Definitions:

Weighted-Average Method

An inventory costing method that assigns a weighted average cost to each unit of inventory on hand.

Equivalent Unit

An accounting measure used to compute the number of units produced during a reporting period, converting partially completed units into an equivalent number of fully completed units.

Equivalent Units

A concept used in process costing that converts work-in-process inventory to a number of fully finished units.

Process Costing

A costing method used in manufacturing where costs are assigned to batches or production runs, typically for homogeneous products.