Which of the Following Statements About Internal Controls Are Correct

question 104

Multiple Choice

Which of the following statements about internal controls are correct?

• A)It is not possible to have perfect (materially correct)financial statements and no internal controls.
• B)It is possible to have perfect internal controls and materially incorrect financial statements.
• C)Testing internal controls answers the question,"Are the financial statements correct?" It only answers the question,"Are the controls working to prevent or detect misstatements in the financial statements?"
• D)Control tests answer the question,"Are the account balances correct?"
• E)What companies say they do is often quite different from what they actually do.
• F)Both A and B
• G)Both B and E
• H)Both C and D

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Definitions:

Evaluation

Assesses the credibility of statements or other representations that are accounts or descriptions of a person’s perception, experience, situation, judgment, belief, or opinion; also assesses the logical strength of the actual or intended inferential relationships among statements, descriptions, questions, or other forms of representation.

Challenging Problem

A problem or question that is difficult to solve and requires significant effort or creativity.

Problem Solving

The process of identifying a challenge or difficulty and finding an effective solution for it.

Human Decision Making

The process by which individuals make choices or come to conclusions based on factors such as personal preference, reasoning, and external influences.