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

Managers use an internal control system to:

increase company profits through speculative investments

safeguard assets and ensure the reliability of financial reporting

reduce the number of employees required in the organization

eliminate the need for external audits

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Verified step by step guidance

Understand the concept of internal control systems: Internal control systems are processes and procedures implemented by a company to safeguard its assets, ensure the accuracy and reliability of financial reporting, and promote operational efficiency.

Clarify the purpose of internal control systems: The primary goal is not to increase profits through speculative investments, reduce the workforce, or eliminate external audits. Instead, it focuses on protecting company assets and ensuring accurate financial reporting.

Analyze the options provided: Evaluate each option against the purpose of internal control systems. For example, speculative investments are risky and not aligned with safeguarding assets, while reducing employees or eliminating audits does not directly contribute to reliable financial reporting.

Identify the correct answer: Based on the analysis, the correct purpose of internal control systems is to safeguard assets and ensure the reliability of financial reporting.

Relate the concept to practical applications: Internal control systems include measures such as segregation of duties, regular reconciliations, and adherence to accounting standards to achieve their objectives effectively.