To Improve Accountability for Fixed Asset Retirements, Management Most Likely

question 19

Multiple Choice

To improve accountability for fixed asset retirements, management most likely would implement a system of internal control that includes:

• A)continuous analysis of the repairs and maintenance account.
• B)periodic inquiry of plant executives by internal auditors as to whether any plant assets have been retired.
• C)a level of authorization above the department initiating the retirement.
• D)periodic inspection of insurance policies by the internal auditors.

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Definitions:

Profit

The financial gain realized when the amount earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Monopolistically Competitive Firm

A company that operates in a market with many competitors, each offering products that are similar but not identical, allowing for some degree of market power.

Price Higher Than Marginal Cost

A situation where the selling price of a product is set above the marginal cost of production, often leading to increased profitability but potentially distorting market efficiency.

Economic Profit

Economic profit is the difference between a firm's total revenue and its total costs, including both explicit and implicit costs, thereby measuring efficiency beyond accounting profit.