Which One of the Following Is Not an Objective of a System

question 154

Multiple Choice

Which one of the following is not an objective of a system of internal controls?

• A) Safeguard company assets
• B) Overstate liabilities in order to be conservative
• C) Enhance the accuracy and reliability of accounting records
• D) Reduce the risks of errors

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Definitions:

Predetermined Overhead Rate

A rate calculated before a period begins, used to apply overhead costs to products based on a certain activity such as labor hours or machine hours.

Machine-Hours

A measure of the amount of time machines are operating in the production process, often used to allocate manufacturing overhead costs.

Markup

The amount added to the cost price of goods to cover overhead and profit, calculated as a percentage of the cost.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders and is typically based on direct labor hours, direct labor costs, or machine hours.