Multiple Choice
If one owner of a partnership makes a bad decision that results in the business being sued, then:
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6. Internal Controls and Reporting Cash
Fraud and the Fraud Triangle
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Good recordkeeping helps protect assets and helps managers:
A
reduce the company's tax liability directly
B
avoid preparing financial statements
C
detect and prevent fraud by providing accurate financial information
D
eliminate the need for internal controls
Verified step by step guidance1
Understand the importance of good recordkeeping in financial accounting. It involves maintaining accurate and organized financial records to ensure transparency and accountability.
Recognize that good recordkeeping helps protect assets by providing a clear trail of transactions, which can be used to verify the legitimacy of activities and detect discrepancies.
Learn that accurate financial information from good recordkeeping enables managers to detect and prevent fraud. Fraud detection is possible because discrepancies or unusual patterns in records can be identified and investigated.
Understand that good recordkeeping supports internal controls. Internal controls are processes and procedures designed to safeguard assets, ensure accurate financial reporting, and promote operational efficiency.
Note that good recordkeeping does not directly reduce tax liability or eliminate the need for financial statements or internal controls. Instead, it provides the foundation for accurate reporting and compliance with regulations.
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