Which of the Following Statements About Internal Controls Are Correct

question 6

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 not possible to have perfect internal controls and materially incorrect financial statements.
• C)Testing internal controls answers the question,"Are the financial statements correct?"
• D)Substantive tests answer the question,"Are the account balances and classes of transactions correct?"
• E)What companies say they do is often quite different from what they actually do.
• F)Both A and B
• G)Both C and D
• H)Both D and E

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Definitions:

Interest

The payment made for the use of (borrowed) money.

Total Fertility Rate

The average number of children a woman is expected to have during her lifetime in a specific population.

Present Value

The present value of a future amount of money or series of cash flows, using a given rate of return.

Market Rate

The prevailing price or cost of products, services, or labor in a competitive marketplace as determined by supply and demand.