Of the Following Statements About an Internal Control System,which One

question 74

Multiple Choice

Of the following statements about an internal control system,which one is correct?

• A) The maintenance of the system of internal control is an important responsibility of the internal auditor.
• B) Administrative controls relate directly to the safeguarding of assets.
• C) Because of the cost/benefit relationship, tests of controls may be applied on a test basis in some circumstances.
• D) Well designed internal control activities always prevent collusion among employees.

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Definitions:

Computed Net

An amount calculated after accounting for all relevant adjustments, deductions, and allowances.

Annuity

A financial product that pays out a fixed stream of payments to an individual, primarily used as an income stream for retirees.

Present Value Tables

Tables utilized in finance to determine the present value of a sum that will be received at a future date by applying a specific discount rate.

Original Investment

The initial amount of money put into a project, asset, or business, used as a basis for determining future returns or profitability.