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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following components of internal control is most directly related to ensuring that a financial report is fair and effective?

Information and Communication

Monitoring Activities

Control Activities

Control Environment

Previous problemNext problem

Verified step by step guidance

Understand the concept of internal control: Internal control refers to the processes and procedures implemented by an organization to ensure the reliability of financial reporting, compliance with laws and regulations, and the effectiveness and efficiency of operations.

Review the components of internal control: The five components of internal control are Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring Activities. Each plays a distinct role in ensuring the integrity of financial reporting.

Analyze the role of Information and Communication: This component ensures that relevant information is identified, captured, and communicated in a timely manner to enable employees to carry out their responsibilities effectively. It is directly related to ensuring that financial reports are fair and effective.

Evaluate the role of Monitoring Activities: Monitoring involves assessing the quality of internal control performance over time. While important, it is more focused on the ongoing evaluation of controls rather than directly ensuring the fairness of financial reports.

Compare the roles of Control Activities and Control Environment: Control Activities are specific policies and procedures designed to address risks, while the Control Environment sets the tone of the organization, influencing the control consciousness of its people. Neither is as directly related to the fairness and effectiveness of financial reporting as Information and Communication.