Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Five Components of Internal Controls

Financial Accounting

6. Internal Controls and Reporting Cash

Five Components of Internal Controls

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Multiple Choice

Which of the following is a principle of internal control?

Segregation of duties

Recording transactions only at year-end

Maximizing net income

Eliminating all documentation

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Verified step by step guidance

Understand the concept of internal control: Internal control refers to the processes and procedures implemented by an organization to ensure the reliability of financial reporting, compliance with laws and regulations, and the safeguarding of assets.

Review the principle of segregation of duties: Segregation of duties is a key principle of internal control that involves dividing responsibilities among different individuals to reduce the risk of errors or fraud. For example, the person responsible for recording transactions should not be the same person responsible for authorizing them.

Analyze the other options: Recording transactions only at year-end is not a principle of internal control, as transactions should be recorded promptly to ensure accurate financial reporting. Maximizing net income is a business goal, not an internal control principle. Eliminating all documentation contradicts internal control principles, as proper documentation is essential for accountability and audit purposes.

Compare the options to the definition of internal control principles: Segregation of duties aligns with the goal of internal control to prevent fraud and errors, while the other options do not support the objectives of internal control.

Conclude that segregation of duties is the correct answer: Based on the analysis, segregation of duties is a fundamental principle of internal control that helps ensure the integrity of financial processes.