Internal Control Is the System of Policies and Procedures That

question 15

Multiple Choice

Internal control is the system of policies and procedures that is designed to:

• A)protect assets against fraud and waste.
• B)provide for accurate accounting data.
• C)promote efficient operation.
• D)encourage adherence to management policies.
• E)all of the answers listed.

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Definitions:

Cost of Goods Available for Sale

The total cost of inventory that a business has ready for sale, comprising both beginning inventory plus the cost of goods manufactured.

Overapplied

A situation where the allocated manufacturing overhead cost exceeds the actual manufacturing overhead costs incurred, resulting in an apparent surplus.

Underapplied

A situation where the allocated manufacturing overhead is less than the actual overhead incurred.

Predetermined Overhead Rate

An estimated charge per unit of activity used to allocate manufacturing overhead costs to products, calculated before the accounting period begins based on expected costs and activity levels.