A Good System of Internal Controls Requires That the Physical

question 140

True/False

A good system of internal controls requires that the physical custody of assets be separated from the accounting for those assets.This concept is known as safeguarding assets and records.

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Definitions:

GAAP

Generally Accepted Accounting Principles, a set of accounting standards and procedures used in the compilation of financial statements in the U.S.

Lessee

The party in a lease agreement who rents or leases property from the lessor.

Lease as Asset

An agreement where a lessee gains the right to use an asset for a specified period in exchange for payment, recognized as an asset on the lessee's balance sheet under certain conditions.

Purchase Option

A clause in a contract that allows one party to purchase goods or assets from the other party at a predetermined price within a specified timeframe.