Multiple Choice
Which of the following statements about internal control is correct?
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6. Internal Controls and Reporting Cash
Five Components of Internal Controls
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Which of the following is NOT one of the five components of internal control as defined by COSO?
A
Control Environment
B
Risk Assessment
C
Information and Communication
D
Revenue Recognition
Verified step by step guidance1
Understand the context: The question is asking about the five components of internal control as defined by COSO (Committee of Sponsoring Organizations of the Treadway Commission). These components are essential for establishing effective internal controls within an organization.
Review the five components of internal control defined by COSO: 1) Control Environment, 2) Risk Assessment, 3) Control Activities, 4) Information and Communication, and 5) Monitoring Activities.
Compare the options provided in the question with the five components of internal control. Identify which options align with the COSO framework and which do not.
Recognize that 'Revenue Recognition' is not one of the five components of internal control. Revenue recognition is an accounting principle related to the timing and criteria for recognizing revenue, not a component of internal control.
Conclude that the correct answer is 'Revenue Recognition' because it does not belong to the COSO framework for internal control components.
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