Those Controls That Are Relevant to Implementing Good Internal Control

question 20

Multiple Choice

Those controls that are relevant to implementing good internal control processes within specific transaction cycles are called:

• A) general controls.
• B) transaction processing controls.
• C) management controls.
• D) all of the above.

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Definitions:

Operating Leverage

The degree to which a firm or project can increase operating income by increasing revenue, a measure of how sales growth translates to growth in operating income.

Forecasting Error

The difference between the actual outcome and the predicted value in a forecast.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating a company's fixed versus variable costs.

Variable Costs

Expenses that change in proportion to the level of production or sales, such as raw materials and labor costs.