Internal Control System Have Limitations

question 68

Multiple Choice

Internal control system have limitations. These include all of the following except

• A) possibility of honest error
• B) circumvention
• C) management override
• D) stability of systems

Identify necessary consolidation adjustments for gains or losses from intra-entity sales.

Understand and apply the equity method of accounting for investments in common stock.

Calculate and defer intra-entity gross profit from inventory transfers.

Determine the gain or loss on intra-entity asset transfers.

---

Definitions:

Supply Curve

A graphical representation showing the relationship between the price of a good or service and the quantity of that good or service that suppliers are willing and able to provide at various prices.

Demand Curve

A graph showing the relationship between a product's price and the quantity demanded by consumers, typically downward-sloping.

Tax Revenue

The resources governments collect by imposing taxes.

Total Surplus

The combined total of consumer plus producer surplus, which indicates the overall advantage to society from manufacturing and using goods and services.