The Most Serious Limitation of Internal Controls Is

question 40

Multiple Choice

The most serious limitation of internal controls is

• A)internal controls frequently cost more than the benefit derived
• B)there is no causal relationship between good internal controls and good financial statements
• C)internal control testing requires a skill set that is costly
• D)internal controls have limited use in automated systems

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Definitions:

Bonds Payable

Long-term liabilities representing money a company owes to holders of its bonds, which must be repaid at a future date.

Debt Investments-HTM

Investments in debt securities intended to be held to maturity, accounting for fixed-income investments until they are redeemed.

Bonds Mature

The point in time when a bond's principal amount is due to be paid back to the bondholder.

Interest Payments

Payments made to a lender by a borrower in return for the use of borrowed money, typically represented as an annual percentage of the loan principal.