A Good System of Internal Control

question 24

Multiple Choice

A good system of internal control:

• A)Urges adherence to prescribed managerial policies
• B)Insures profitable operations
• C)Eliminates the need for an audit
• D)Requires the use of non-computerized systems
• E)Is not necessary if the company uses a computerized system

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Definitions:

Retained Earnings

The portion of a company's profit that is held back and not distributed to shareholders as dividends, used for investment or paying off debt.

Straight-Line Depreciation

A depreciation technique that allocates an equal amount of depreciation each year over the asset's useful life.

Residual Value

The estimated amount that an asset is expected to sell for at the end of its useful life, subtracting any disposal costs.