The Basic Concept of Internal Control That Recognizes the Cost

question 22

Multiple Choice

The basic concept of internal control that recognizes the cost of internal control should not exceed the benefits expected to be derived is known as:

• A)Reasonable assurance.
• B)Management responsibility.
• C)Limited liability.
• D)Management by exception.

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Definitions:

Sole Proprietorships

A type of business owned and operated by one individual, where there is no legal distinction between the owner and the business.

Corporations

Legal entities that are separate and distinct from their owners, providing limited liability, easy transferability of shares, and perpetual existence.

Joint Ventures

A business agreement between two or more parties to develop a new entity and new assets by contributing equity.

Common Laws

Laws that have developed through court decisions, traditions, and legal precedents rather than through legislative statutes.