Internal Controls Are Important Because They

question 17

Multiple Choice

Internal controls are important because they:

• A) deter fraud and prevent misleading financial statements.
• B) eliminate fraud.
• C) ensure that the company maintains a compensating balance.
• D) guarantee accurate financial statements.

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Definitions:

Lottery

A form of gambling that involves the drawing of numbers at random for a prize, often analyzed for its economic impact and decision-making under uncertainty.

Probability

A measure of the likelihood that an event will occur, ranging from 0 (impossibility) to 1 (certainty).

Expected Utility Function

A concept in economics that represents an individual's preference for certain outcomes over others, calculated as a weighted average of the utility of all possible outcomes, based on their probabilities.

Utility Function

In economics, a mathematical representation that ranks individuals' preferences over sets of goods and services, indicating the level of satisfaction or utility they obtain.