When Internal Controls Are Effective

question 1

Multiple Choice

When internal controls are effective,

• A) there will be an increased reliance on substantive tests of transactions and account balances.
• B) control risk will also be high.
• C) the organization is more likely to achieve its strategic and operating objectives.
• D) the organization is less likely to achieve its strategic and operating objectives.

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Definitions:

Advertising Expense

Costs incurred by a business to promote its products or services.

Accounts Payable

Money owed by a business to its suppliers or creditors for products or services received.

Income Statement Accounts

Categories within an income statement that record different types of revenue, expenses, gains, and losses, affecting the net income of a business.

Temporary Accounts

Accounts in the general ledger that are closed at the end of the accounting period, transferring their balances to permanent accounts.