Compensating Controls in the Finance and Investment Cycle

question 55

Multiple Choice

Compensating controls in the finance and investment cycle:

• A)feature separation of duties by upper management.
• B)feature involvement of two or more persons handling all important responsibilities.
• C)include involvement by the external auditor.
• D)include all the above.

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Definitions:

Effective Tax Rate

The average rate at which an individual or a corporation is taxed, calculated by dividing the total tax by the taxable income.

Tax Expense

The total amount of taxes owed by an individual or corporation as a result of taxable activities or income during a fiscal year.

Income Before Taxes

The total revenue of a company minus all expenses except for income tax expenses.

Current Ratio

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.