Factors That Indicate the Need for Internal Controls Over Fixed

question 60

Multiple Choice

Factors that indicate the need for internal controls over fixed assets processes include all of the following, except:

• A)General nature of fixed assets makes the susceptible to theft because they are distributed throughout the business and are in the hands of many
• B)Large quantities of fixed assets
• C)High likelihood of obsolescence due to technological changes
• D)The high cost of assets

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Definitions:

Cost Method

An accounting method used to value an investment, based on the cost to acquire it plus any additional investments or deducting any reductions.

Impairment Loss

A reduction in the book value of an asset when its market value falls below its carrying amount on the balance sheet.

Straight Line Amortization

An approach to systematically allocate the cost of an intangible asset throughout its period of usefulness.

Fair Value Enterprise

An approach to valuing a company based on the current price at which its assets or services could be sold or settled between knowledgeable, willing parties in an arm's length transaction.