Which of the Following Best Explains the Relationship Between General

question 97

Multiple Choice

Which of the following best explains the relationship between general controls and application controls?

• A) Application controls are effective even if general controls are extremely weak.
• B) Application controls are likely to be effective only when general controls are effective.
• C) General controls have no impact on application controls.
• D) None of the above.

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Definitions:

Dividends in Arrears

Unpaid dividends on cumulative preferred stock that must be paid out before any dividends can be issued on common stock.

Preferred Shareholders

Investors who own preferred shares of a company, which typically offer dividends before common stock and have priority in asset liquidation.

Voting Rights

The rights of shareholders to vote on corporate matters, typically exercised at annual meetings.

Fixed Dividend

A type of dividend payment on preferred stock that remains constant and does not fluctuate with the earnings of the company.