Question

Which of the following statements is TRUE?

A. Internal controls include the policies and procedures a company implements to protect against theft of assets, to promote efficiency, and to ensure compliance with laws and regulations.
B. An organization implements internal controls without consideration of whether or not the cost exceeds their benefits.
C. The use of internal controls gives guaranteed protection against losses due to operating activities.
D. Internal control policies and procedures are identical across companies.
E. All of the above.

Answer 1

The true statement is that internal controls are policies and procedures designed to protect assets, promote efficiency, and ensure compliance. They differ across companies and are implemented weighing costs against benefits.

Step-by-step explanation:

The statement that is TRUE amongst those listed is: A. Internal controls include the policies and procedures a company implements to protect against theft of assets, to promote efficiency, and to ensure compliance with laws and regulations. Internal controls are crucial for a company to safeguard assets, encourage efficient practices and adhere to legal and regulatory requirements. These controls are tailored to each organization's needs and the costs of implementing them are considered relative to the benefits they provide. They do not offer absolute protection against losses, and the policies and practices are not uniform across all companies as each organization tailors them according to their specific environment and risks.