A Strong Internal Control System Will Reduce the Amount of Substantive

question 78

True/False

A strong internal control system will reduce the amount of substantive testing that must be performed.

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Definitions:

Equipment

Tangible assets used in operations, such as machinery or office hardware, that play a key role in business operations and productivity.

Allowance for Repairs

A reserve of funds set aside by a company to cover anticipated repair costs for its assets.

Deferred Credit

Liabilities or income that have been recognized but not yet earned, and therefore, postponed to a future accounting period.

Contra Account

An account that is used to reduce the value of a related account on a financial statement and presents the net balance of both accounts.