Of the Following Statements About Internal Control,which One Is not

question 92

Multiple Choice

Of the following statements about internal control,which one is not valid?

• A)No one person should be responsible for the custodial responsibility and the recording responsibility for an asset.
• B)Transactions must be properly authorized before such transactions are processed.
• C)Because of the cost/benefit relationship,a client may apply control procedures on a test basis.
• D)Control activities ensure all fraud will be eliminated.

Understand the purpose and components of the end-of-period spreadsheet in the accounting cycle.

Identify the types of accounts and entries that appear in different sections of the end-of-period spreadsheet.

Describe the process for preparing financial statements from the end-of-period spreadsheet.

Analyze how adjustments on the end-of-period spreadsheet impact financial statements.

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Definitions:

Bonds Outstanding

Refers to all the bonds issued by a company that are still in circulation and have not yet been redeemed.

Tax Rate

The cut of profits or earnings that governmental entities subtract as tax from companies or persons.

Debt-Equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by its stockholders' equity.

Pre-Tax Cost

The cost of an investment or expense before the deduction of taxation.