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 primarily to:

Reduce the number of employees needed in the organization

Eliminate the need for external audits

Safeguard assets and ensure the reliability of financial reporting

Increase company profits through aggressive sales tactics

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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 an organization 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 reduce the number of employees, eliminate external audits, or increase profits through aggressive sales tactics. Instead, it is to protect the organization's resources and ensure accurate financial information.

Analyze the options provided in the problem: Evaluate each option to determine whether it aligns with the primary purpose of internal control systems. For example, reducing employees or eliminating audits are not the main objectives of internal controls.

Focus on the correct answer: The correct answer is 'Safeguard assets and ensure the reliability of financial reporting,' as this aligns with the fundamental purpose of internal control systems.

Relate the concept to real-world applications: Internal control systems include measures such as segregation of duties, regular audits, and access controls, all designed to protect assets and ensure accurate financial reporting.