Which of the Following Is TRUE of Internal Control

question 76

Multiple Choice

Which of the following is TRUE of internal control?

• A) A company's outside auditor is responsible for the company's internal control system.
• B) One of the major purposes of internal control is to ensure accurate, reliable accounting records.
• C) Internal control procedures tend to diminish the importance of operational efficiency.
• D) Internal controls are only necessary for large businesses.

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Definitions:

Net Profit Margin

A financial metric showing the amount of each sales dollar left over after all expenses have been paid.

Cash Coverage Ratio

A financial metric used to evaluate a company's ability to pay its debt obligations using its cash and cash equivalents.

Current Liabilities

Obligations of a company that are due to be settled within one year or one operating cycle, whichever is longer.

Operating Activities

The day-to-day actions that involve the production, sales, and delivery of a company's product or service, generating most of the company's cash flows.