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

Internal control does not consist of policies and procedures that:

Help ensure the reliability of financial reporting

Promote operational efficiency and effectiveness

Guarantee the achievement of organizational objectives with absolute certainty

Encourage compliance with applicable laws and regulations

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Verified step by step guidance

Understand the concept of internal control: Internal control refers to the policies and procedures implemented by an organization to ensure the reliability of financial reporting, promote operational efficiency, and encourage compliance with laws and regulations.

Recognize the limitations of internal control: While internal control is designed to help achieve organizational objectives, it cannot guarantee absolute certainty in achieving these objectives due to inherent limitations such as human error, collusion, or management override.

Analyze the options provided in the problem: Evaluate each statement to determine whether it aligns with the purpose and limitations of internal control. For example, ensuring reliability of financial reporting and promoting operational efficiency are valid purposes of internal control.

Identify the incorrect statement: The statement 'Guarantee the achievement of organizational objectives with absolute certainty' is incorrect because internal control systems cannot provide absolute assurance due to their inherent limitations.

Conclude the reasoning: Internal control is a system designed to reduce risks and improve processes, but it cannot eliminate all risks or guarantee outcomes with absolute certainty. This understanding helps clarify why the incorrect statement does not align with the concept of internal control.