Obtaining an Understanding of an Internal Control Involves Evaluating the Design

question 45

Multiple Choice

Obtaining an understanding of an internal control involves evaluating the design of the control and determining whether the control has been:

• A)authorized.
• B)implemented.
• C)tested.
• D)monitored.

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Definitions:

Subsidiary Asset

An asset owned by a subsidiary company, which itself is controlled by a parent company through ownership of more than half of its voting stock.

Accumulated Impairment Loss

The total amount of impairment loss that has been recognized on assets over their lifetime, reducing their book value.

Impairment Loss

A reduction in the recoverable value of an asset to below its carrying amount, resulting in a charge against income.

Consolidation Worksheet

A tool used in the preparation of consolidated financial statements that helps in combining and adjusting the financial information of parent and subsidiary companies.