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 best explains why management implements internal controls within an organization?

To eliminate the need for external audits

To guarantee profitability in all business operations

To avoid compliance with legal and regulatory requirements

To ensure the reliability of financial reporting and safeguard assets

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Verified step by step guidance

Understand the concept of internal controls: Internal controls are processes and procedures implemented by management to ensure the reliability of financial reporting, safeguard assets, and ensure compliance with laws and regulations.

Evaluate the incorrect options: Review why the other options are not correct. For example, internal controls do not eliminate the need for external audits, guarantee profitability, or allow avoidance of legal compliance.

Focus on the correct purpose: Internal controls are designed to ensure accurate financial reporting, protect company assets, and promote operational efficiency.

Relate internal controls to financial accounting: Highlight how internal controls help prevent fraud, errors, and misstatements in financial records, which are critical for stakeholders relying on financial information.

Conclude with the correct explanation: Management implements internal controls to ensure the reliability of financial reporting and safeguard assets, which is essential for maintaining trust and accountability within the organization.