Why Are Internal Controls So Important to Companies? What Are

question 31

Essay

Why are internal controls so important to companies? What are the implications for companies if their internal controls are not operating effectively?

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Definitions:

Preferred Stock

A class of share ownership in a corporation that typically confers priorities over common stock in dividend payments and upon liquidation.

Limited Partnership

A business partnership where some owners contribute capital and enjoy profits without participating in day-to-day management, limiting their liabilities.

General Partner

A member of a partnership who has unlimited liability for the debts of the business and actively participates in its management.

Partnership's Checkbook

A financial tool used by a partnership for handling and recording transactions.