Increasing the Effectiveness of Internal Controls Would Have the Greatest

question 101

Multiple Choice

Increasing the effectiveness of internal controls would have the greatest effect on

• A)reducing inherent risk.
• B)reducing control risk.
• C)reducing detection risk.
• D)reducing audit risk.

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Definitions:

Legal Title

The formal right of ownership of property, which is recognized and protected by law.

Perpetual Inventory System

An accounting method that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

Purchases Account

A ledger account in which the total amount of goods purchased during a period is recorded.

Current Cost Accounting System

An accounting approach that records assets and liabilities at their current market value instead of their historical cost.