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

Which of the following is an example of a preventive control in a company?

Investigating variances between budgeted and actual expenses

Reviewing monthly bank reconciliations for discrepancies

Preparing financial statements at the end of each quarter

Requiring employees to use unique passwords to access the accounting system

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Verified step by step guidance

Understand the concept of preventive controls: Preventive controls are measures designed to stop errors or fraud before they occur. They focus on proactive actions to safeguard assets and ensure the integrity of financial data.

Analyze the options provided: Investigating variances, reviewing bank reconciliations, and preparing financial statements are examples of detective or corrective controls, as they identify or address issues after they occur.

Focus on the correct answer: Requiring employees to use unique passwords is a preventive control because it restricts unauthorized access to the accounting system, reducing the risk of fraud or data breaches.

Relate the concept to real-world practices: Preventive controls like password protection, segregation of duties, and access restrictions are commonly implemented in companies to ensure secure and reliable financial operations.

Conclude the reasoning: The correct answer is 'Requiring employees to use unique passwords to access the accounting system,' as it aligns with the definition and purpose of preventive controls.