Which Statement About a Company's Internal Controls Over Financial Reporting

question 113

Multiple Choice

Which statement about a company's internal controls over financial reporting is FALSE?

• A)Management must determine whether the internal controls over financial reporting are effective.
• B)The internal controls over financial reporting are the responsibility of management.
• C)The internal controls over financial reporting are studied and assessed by management.
• D)The internal controls over financial reporting are established by the outside auditors.

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Definitions:

FIFO Basis

Stands for "First In, First Out," an inventory valuation method where the costs of the earliest goods purchased or produced are the first to be recognized in determining cost of goods sold.

Perpetual Inventory System

A method where inventory quantities and cost of goods sold amounts are updated continuously as sales occur and purchases are made.

Lower-of-cost-or-market

An accounting principle that values inventory at the lower of its historical cost or current market price.

Average Cost

A method of inventory valuation that calculates the cost of goods sold and ending inventory based on the weighted average of all units purchased.