Which of the Following Best Defines Internal Control

question 7

Multiple Choice

Which of the following best defines internal control?

• A) Internal rules and/or regulations with which organizations are expected to comply regarding accounting standards and preparation of financial data.
• B) A process by which management gains reasonable assurance that its objectives will be achieved.
• C) Procedures for input of and access to information systems used for internal analysis of an organization's short-term and long-term objectives.
• D) A system of checks and balances that allows an organization to maintain control over its resources (data, systems, and all other assets).

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Definitions:

Variable Costing

An accounting method that includes only variable production costs (materials, labor, and variable overhead) in product cost calculations, excluding fixed overhead.

Absorption Costing

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Income Statement

A financial statement showing the revenue, expenses, and profit or loss of a company over a specific period.

Equivalent Units

A measure used in cost accounting to express the amount of work done on partially finished goods in terms of fully completed units.