Which of the Following Is a Correct Statement About Internal

question 57

Multiple Choice

Which of the following is a correct statement about internal controls?

• A)The internal control function in a company is a process designed by management and others charged with governance to provide reasonable assurance that the financial statements are prepared in accordance with the applicable financial reporting framework.
• B)Management develops internal controls to prevent misstatements in the financial statements.
• C)The auditor reviews the internal controls developed by management to assess whether the internal controls are effective in detecting misstatements.
• D)The auditing standards define internal controls over financial statements as processes designed by management and others charged with governance to provide assurance that company responsibilities are met.

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Definitions:

Beginning Finished Goods

Refers to the inventory of completed products that a company has on hand at the start of an accounting period.

Direct Labor

The labor costs directly tied to the production of goods or the provision of services, such as wages for factory workers or technicians.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, aside from the costs of direct labor and direct materials.

Direct Materials

Raw materials directly traced and included in the finished product.