Chapter 8, Problem 1QS

To determine

Concept Introduction:

Internal Control:

Internal controls are policies and procedures implemented by an organization to attain operational goals and maintain the integrity of accounting. Internal Control system has its five integral components those together works an effective internal control.

Principles of Internal Control:

Principles of Internal Control are the ways to maintain proper internal controls in an organization. These principles are as follows:

• Establishing Responsibilities
• Maintaining Records
• Safeguards of assets
• Segregation of Duties
• Compulsory Employees Job Rotation
• Split Related Party Responsibility
• Using the Technology for Controls
• Conducting timely Independent Reviews

To identify:

The true of false for the given statements

Explanation of Solution

The true of false for the given statements is explained as follows;

#		True or False
1	According to the Safeguard of assets principle of the internal control, the separation of the assets from the custody over assets helps reduce frauds.	TRUE
2	The primary objective of the internal control is to safeguard the business and its assets from theft.	FALSE
3	According to the Safeguard of assets principle of the internal control, Internal control procedures are designed to protect assets from waste and theft.	TRUE
4	According to the Separation of duties principle of the internal control, the separation of responsibilities amongst more than one individuals helps in preventing frauds.	FALSE