Important Objectives of a System of Internal Controls Are to Safeguard

question 19

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) the human element and (2) the size of the business affect the implementation of a system of internal controls.

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Definitions:

Straight Line Amortization

A method of allocation of an asset's cost over its useful life in equal annual amounts.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Non-Controlling Interest

A stake in a company that is not large enough to control company decisions, representing ownership by minority shareholders in a subsidiary not wholly owned by the parent.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and adjusted thereafter for the investor's share of the investee's profit or losses.