A Primary Purpose of Internal Controls Is To

question 52

Multiple Choice

A primary purpose of internal controls is to:

• A)form a basis for evaluating employees.
• B)monitor production quality.
• C)avoid clerical errors.
• D)meet objectives of maintaining sound documents and records and accurate financial reporting.

Understand the role and legal obligations of promoters in corporate formation.

Comprehend the process and requirements for the incorporation and organization of corporations.

Recognize the different types of securities a corporation may issue and the rights associated with them.

Grasp the legal implications of defective incorporation and the liability of parties involved.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.

Residual Income

A performance measure for investment centers that subtracts the opportunity cost of the investment from the income generated by the assets of the investment.

Senior Management

High-level executives responsible for the overall management and effectiveness of an organization.