Which One of the Following Statements Regarding Internal Control Is

question 14

Multiple Choice

Which one of the following statements regarding internal control is true?

• A) Companies can design a system of internal control that is foolproof.
• B) A well-designed internal control system is a luxury that few companies can afford.
• C) It is easier to implement an effective internal control system in a small company because of the limited number of employees.
• D) Large companies are able to devote a substantial amount of resources to internal control systems because these companies have the assets to justify the cost.

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Definitions:

LIBOR

The London Interbank Offered Rate, previously a benchmark interest rate at which major global banks lend to one another.

Bankers' Acceptances

Short-term debt instruments issued by a company that is guaranteed by a commercial bank, commonly used in international trade.

Brokers' Calls

The interest rate charged by banks on loans extended to brokerage firms for the purpose of funding clients' margin accounts.

Residual Claimant

An individual or entity entitled to a share of a company's assets only after all debts and other obligations have been met in the event of liquidation.