Which of the Following Is NOT True of a Sound

question 5

Multiple Choice

Which of the following is NOT true of a sound system of internal control?

• A) Implementation of controls involves costs.
• B) A sound system of internal control is the responsibility of management.
• C) All errors and irregularities should be eliminated.
• D) A sound system of internal control is fundamental to the production of reliable financial reports.

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Definitions:

Efficiency Variance

The difference between the actual input used in production and the standard input that should have been used, measured in monetary terms.

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, which is often analyzed in cost accounting to assess performance.

Labor Cost

The total amount of money that a company pays to its employees, including wages, benefits, and taxes.

Direct Materials Price Variance

The difference between the actual cost of direct materials and the standard cost, multiplied by the actual quantity purchased.