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

Principles of Control Activities

Financial Accounting

6. Internal Controls and Reporting Cash

Principles of Control Activities

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Multiple Choice

Which of the following statements best summarizes the principles you should use when budgeting? Select the best answer.

Budgets should be created solely by upper management without input from other departments.

Budgets should be as optimistic as possible to motivate employees.

Budgets should be based on realistic and attainable goals, with input from all relevant departments.

Budgets should remain unchanged throughout the year, regardless of changing circumstances.

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Verified step by step guidance

Understand the purpose of budgeting: Budgets are financial plans that help organizations allocate resources effectively, set goals, and monitor performance. They should be realistic and involve collaboration across departments.

Evaluate the first statement: 'Budgets should be created solely by upper management without input from other departments.' This is incorrect because effective budgeting requires input from all relevant departments to ensure accuracy and feasibility.

Evaluate the second statement: 'Budgets should be as optimistic as possible to motivate employees.' This is also incorrect because overly optimistic budgets can lead to unrealistic expectations and poor decision-making.

Evaluate the third statement: 'Budgets should be based on realistic and attainable goals, with input from all relevant departments.' This is correct because it aligns with the principles of effective budgeting, ensuring goals are achievable and inclusive of diverse perspectives.

Evaluate the fourth statement: 'Budgets should remain unchanged throughout the year, regardless of changing circumstances.' This is incorrect because budgets should be flexible and adaptable to reflect changes in the business environment or unforeseen events.