An Internal Control That Is Ineffective to the Extent That

question 48

Multiple Choice

An internal control that is ineffective to the extent that it might not prevent the financial statements from being materially misstated is referred to as a

• A) significant risk
• B) substantive error
• C) material weakness
• D) tolerable misstatement

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Definitions:

Annually Balanced Budget

A financial statement showing that projected government revenues equal expected expenditures on an annual basis.

Destabilize

To cause a system, situation, or environment to become unstable or out of balance.

Economy

The large set of interrelated production, consumption, and exchange activities that aid in determining how scarce resources are allocated.

Full-Employment

Full-employment refers to the level of employment rates where there is no cyclical or deficient-demand unemployment, essentially meaning that everyone who wants to work and is able to work can find employment at the current wage rates.