A Company's Internal Control System

question 4

Multiple Choice

A company's internal control system:

• A)Eliminates the risk of loss.
• B)Monitors and controls business activities.
• C)Eliminates human error.
• D)Eliminates the need for audits.
• E)Is not necessary in large companies.

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Definitions:

Operating Activities

The day-to-day activities of a business that are directly related to its principal revenue-generating operations, such as sales and service delivery.

Indirect Method

A cash flow statement reporting approach that adjusts net income for changes in non-cash accounts to compute cash flow from operating activities.

Comparative Balance Sheet

A financial statement that displays a company's financial position at different points in time side-by-side, facilitating period-to-period comparison.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments, reflected in the cash flow statement.