Describe the five elements of internal control.

Question

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Answer 1

Question

Chapter 8, Problem 1DQ

1.

To determine

Describe the five elements of internal control.

1.

Expert Solution

Explanation of Solution

Internal Control: Internal control refers to the policies, and plans of the business organization along with other measures with a view to safeguard its assets, encourage the employees to adhere to the plans, to improve on the operational efficiency, and to ensure correct and reliable accounting information. Internal control is a process which ensures continuous reliability of accomplishment of a company’s objectives, related to operations, financial reporting, and in conformity with laws and regulations.

Five elements of internal control:

Control Environment: Control Environment refers to the attitude of top brass of the company or the corporate culture. The top brass of the company must set the tone to improve the morale for rest of the employees of the business.
Risk assessment: The business must be able identify the risk associated with it, and accordingly use the internal control to safeguard its assets and ensures fairness in presentation in accounting information.
Control procedures: The objective of setting the control procedure is to ensure that the business achieves its objectives.
Monitoring controls: The internal control used in the business is being monitored by the internal auditors who are hired by the business, to ensure that the employees are adhering to the policies of the business and running the operations efficiently. The external auditors on the other hand ensures that the business accounting records are being maintained in accordance with the Generally Accepted Accounting Principles (GAAP).
Information and communication: Information and communication system is important for a business and hence only authorized persons should be allowed to access the confidential accounting information. Moreover, approvals should be made mandatory for the transactions by the control system.

2.

To determine

Determine the importance of internal control.

2.

Expert Solution

Explanation of Solution

When the elements of internal control are considered, one element of internal control is not important than other. In order to have an effective internal control, all five elements are considered to be necessary.

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Coronado Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi- purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours x (54,000+10,200)]. Estimated annual manufacturing overhead is $1,566,090. Thus, the predetermined overhead rate is $16.26 or ($1,566,090 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models. The company's managers identified six activity cost pools and related…

Coronado Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi- purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours x (54,000+ 10,200)]. Estimated annual manufacturing overhead is $1,566,090. Thus, the predetermined overhead rate is $16.26 or ($1,566,090 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models. The company's managers identified six activity cost pools and related…

Answer 2

Question

Chapter 8, Problem 1DQ

1.

To determine

Describe the five elements of internal control.

1.

Expert Solution

Explanation of Solution

Internal Control: Internal control refers to the policies, and plans of the business organization along with other measures with a view to safeguard its assets, encourage the employees to adhere to the plans, to improve on the operational efficiency, and to ensure correct and reliable accounting information. Internal control is a process which ensures continuous reliability of accomplishment of a company’s objectives, related to operations, financial reporting, and in conformity with laws and regulations.

Five elements of internal control:

Control Environment: Control Environment refers to the attitude of top brass of the company or the corporate culture. The top brass of the company must set the tone to improve the morale for rest of the employees of the business.
Risk assessment: The business must be able identify the risk associated with it, and accordingly use the internal control to safeguard its assets and ensures fairness in presentation in accounting information.
Control procedures: The objective of setting the control procedure is to ensure that the business achieves its objectives.
Monitoring controls: The internal control used in the business is being monitored by the internal auditors who are hired by the business, to ensure that the employees are adhering to the policies of the business and running the operations efficiently. The external auditors on the other hand ensures that the business accounting records are being maintained in accordance with the Generally Accepted Accounting Principles (GAAP).
Information and communication: Information and communication system is important for a business and hence only authorized persons should be allowed to access the confidential accounting information. Moreover, approvals should be made mandatory for the transactions by the control system.

2.

To determine

Determine the importance of internal control.

2.

Expert Solution

Explanation of Solution

When the elements of internal control are considered, one element of internal control is not important than other. In order to have an effective internal control, all five elements are considered to be necessary.

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Answer 3

Question

Chapter 8, Problem 1DQ

1.

To determine

Describe the five elements of internal control.

1.

Expert Solution

Explanation of Solution

Internal Control: Internal control refers to the policies, and plans of the business organization along with other measures with a view to safeguard its assets, encourage the employees to adhere to the plans, to improve on the operational efficiency, and to ensure correct and reliable accounting information. Internal control is a process which ensures continuous reliability of accomplishment of a company’s objectives, related to operations, financial reporting, and in conformity with laws and regulations.

Five elements of internal control:

Control Environment: Control Environment refers to the attitude of top brass of the company or the corporate culture. The top brass of the company must set the tone to improve the morale for rest of the employees of the business.
Risk assessment: The business must be able identify the risk associated with it, and accordingly use the internal control to safeguard its assets and ensures fairness in presentation in accounting information.
Control procedures: The objective of setting the control procedure is to ensure that the business achieves its objectives.
Monitoring controls: The internal control used in the business is being monitored by the internal auditors who are hired by the business, to ensure that the employees are adhering to the policies of the business and running the operations efficiently. The external auditors on the other hand ensures that the business accounting records are being maintained in accordance with the Generally Accepted Accounting Principles (GAAP).
Information and communication: Information and communication system is important for a business and hence only authorized persons should be allowed to access the confidential accounting information. Moreover, approvals should be made mandatory for the transactions by the control system.

2.

To determine

Determine the importance of internal control.

2.

Expert Solution

Explanation of Solution

When the elements of internal control are considered, one element of internal control is not important than other. In order to have an effective internal control, all five elements are considered to be necessary.

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Answer 4

Question

Chapter 8, Problem 1DQ

1.

To determine

Describe the five elements of internal control.

1.

Expert Solution

Explanation of Solution

Internal Control: Internal control refers to the policies, and plans of the business organization along with other measures with a view to safeguard its assets, encourage the employees to adhere to the plans, to improve on the operational efficiency, and to ensure correct and reliable accounting information. Internal control is a process which ensures continuous reliability of accomplishment of a company’s objectives, related to operations, financial reporting, and in conformity with laws and regulations.

Five elements of internal control:

Control Environment: Control Environment refers to the attitude of top brass of the company or the corporate culture. The top brass of the company must set the tone to improve the morale for rest of the employees of the business.
Risk assessment: The business must be able identify the risk associated with it, and accordingly use the internal control to safeguard its assets and ensures fairness in presentation in accounting information.
Control procedures: The objective of setting the control procedure is to ensure that the business achieves its objectives.
Monitoring controls: The internal control used in the business is being monitored by the internal auditors who are hired by the business, to ensure that the employees are adhering to the policies of the business and running the operations efficiently. The external auditors on the other hand ensures that the business accounting records are being maintained in accordance with the Generally Accepted Accounting Principles (GAAP).
Information and communication: Information and communication system is important for a business and hence only authorized persons should be allowed to access the confidential accounting information. Moreover, approvals should be made mandatory for the transactions by the control system.

2.

To determine

Determine the importance of internal control.

2.

Expert Solution

Explanation of Solution

When the elements of internal control are considered, one element of internal control is not important than other. In order to have an effective internal control, all five elements are considered to be necessary.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 8, Problem 1DQ

1.

To determine

Describe the five elements of internal control.

1.

Expert Solution

Explanation of Solution

Internal Control: Internal control refers to the policies, and plans of the business organization along with other measures with a view to safeguard its assets, encourage the employees to adhere to the plans, to improve on the operational efficiency, and to ensure correct and reliable accounting information. Internal control is a process which ensures continuous reliability of accomplishment of a company’s objectives, related to operations, financial reporting, and in conformity with laws and regulations.

Five elements of internal control:

Control Environment: Control Environment refers to the attitude of top brass of the company or the corporate culture. The top brass of the company must set the tone to improve the morale for rest of the employees of the business.
Risk assessment: The business must be able identify the risk associated with it, and accordingly use the internal control to safeguard its assets and ensures fairness in presentation in accounting information.
Control procedures: The objective of setting the control procedure is to ensure that the business achieves its objectives.
Monitoring controls: The internal control used in the business is being monitored by the internal auditors who are hired by the business, to ensure that the employees are adhering to the policies of the business and running the operations efficiently. The external auditors on the other hand ensures that the business accounting records are being maintained in accordance with the Generally Accepted Accounting Principles (GAAP).
Information and communication: Information and communication system is important for a business and hence only authorized persons should be allowed to access the confidential accounting information. Moreover, approvals should be made mandatory for the transactions by the control system.

2.

To determine

Determine the importance of internal control.

2.

Expert Solution

Explanation of Solution

When the elements of internal control are considered, one element of internal control is not important than other. In order to have an effective internal control, all five elements are considered to be necessary.

Answer 6

Chapter 8, Problem 1DQ

1.

To determine

Describe the five elements of internal control.

1.

Expert Solution

Explanation of Solution

Internal Control: Internal control refers to the policies, and plans of the business organization along with other measures with a view to safeguard its assets, encourage the employees to adhere to the plans, to improve on the operational efficiency, and to ensure correct and reliable accounting information. Internal control is a process which ensures continuous reliability of accomplishment of a company’s objectives, related to operations, financial reporting, and in conformity with laws and regulations.

Five elements of internal control:

Control Environment: Control Environment refers to the attitude of top brass of the company or the corporate culture. The top brass of the company must set the tone to improve the morale for rest of the employees of the business.
Risk assessment: The business must be able identify the risk associated with it, and accordingly use the internal control to safeguard its assets and ensures fairness in presentation in accounting information.
Control procedures: The objective of setting the control procedure is to ensure that the business achieves its objectives.
Monitoring controls: The internal control used in the business is being monitored by the internal auditors who are hired by the business, to ensure that the employees are adhering to the policies of the business and running the operations efficiently. The external auditors on the other hand ensures that the business accounting records are being maintained in accordance with the Generally Accepted Accounting Principles (GAAP).
Information and communication: Information and communication system is important for a business and hence only authorized persons should be allowed to access the confidential accounting information. Moreover, approvals should be made mandatory for the transactions by the control system.

Answer 7

Chapter 8, Problem 1DQ

1.

To determine

Describe the five elements of internal control.

Answer 8

1.

Expert Solution

Explanation of Solution

Internal Control: Internal control refers to the policies, and plans of the business organization along with other measures with a view to safeguard its assets, encourage the employees to adhere to the plans, to improve on the operational efficiency, and to ensure correct and reliable accounting information. Internal control is a process which ensures continuous reliability of accomplishment of a company’s objectives, related to operations, financial reporting, and in conformity with laws and regulations.

Five elements of internal control:

Control Environment: Control Environment refers to the attitude of top brass of the company or the corporate culture. The top brass of the company must set the tone to improve the morale for rest of the employees of the business.
Risk assessment: The business must be able identify the risk associated with it, and accordingly use the internal control to safeguard its assets and ensures fairness in presentation in accounting information.
Control procedures: The objective of setting the control procedure is to ensure that the business achieves its objectives.
Monitoring controls: The internal control used in the business is being monitored by the internal auditors who are hired by the business, to ensure that the employees are adhering to the policies of the business and running the operations efficiently. The external auditors on the other hand ensures that the business accounting records are being maintained in accordance with the Generally Accepted Accounting Principles (GAAP).
Information and communication: Information and communication system is important for a business and hence only authorized persons should be allowed to access the confidential accounting information. Moreover, approvals should be made mandatory for the transactions by the control system.

Answer 9

1.

Expert Solution

Answer 10

1.

Expert Solution

Answer 11

Expert Solution

Answer 12

2.

To determine

Determine the importance of internal control.

2.

Expert Solution

Explanation of Solution

When the elements of internal control are considered, one element of internal control is not important than other. In order to have an effective internal control, all five elements are considered to be necessary.

Answer 13

2.

To determine

Determine the importance of internal control.

Answer 14

2.

Expert Solution

Explanation of Solution

When the elements of internal control are considered, one element of internal control is not important than other. In order to have an effective internal control, all five elements are considered to be necessary.