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 audit function.
• 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:

Excludable

A feature of a product or service enabling its owner to exclude others from usage unless payment is received.

Property Rights

The legal rights to possess, use, and dispose of assets, including property and intellectual property.

Allocate Resources

The process of assigning available assets, time, and effort to various tasks or purposes in order to achieve specific goals.

Market Failures

Situations where the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss.