Which of the Following Is TRUE of Internal Control

question 227

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 that the assets are safeguarded.
• C) Internal control procedures tend to diminish the importance of operational efficiency.
• D) Internal controls are only necessary for public companies.

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Definitions:

EAR

The Effective Annual Rate; a measure of the annual return on an investment or loan that takes into account the effect of compounding interest.

Credit Cards

Credit cards are financial tools issued by banks or financial institutions, allowing cardholders to borrow funds within a pre-approved credit limit for purchases or cash advances.

Nominal Rate

The interest rate before adjustments for inflation, as opposed to the real rate which is adjusted for inflation.

APR

The Annual Percentage Rate (APR) is a measure of the cost of borrowing that includes interest and other fees, shown as a yearly rate.