Question

The basic concepts implicit in internal accounting controls include the following:

The cost of the system should not exceed benefits expected to be attained.
The overall impact of the control procedure should not hinder operating efficiency.
Which one of the following internal accounting controls recognizes these two factors?

a. Limitations

b. Management responsibility

c. Reasonable assurance

d. Methods of data processing

Answer 1

The internal accounting control concept that takes into account that the cost should not exceed the expected benefits and should not hinder operating efficiency is 'c. Reasonable assurance'.

Step-by-step explanation:

The concept that recognizes both the importance of costs not exceeding benefits and the need to not hinder operating efficiency in internal accounting controls is c. Reasonable assurance. 'Reasonable assurance' refers to the expectation that the design and implementation of these controls will provide a satisfactory level of confidence that business objectives will be achieved, and errors or irregularities will be prevented or detected. This includes considering the balance between potential benefits of controls and the costs associated with implementing them, ensuring efficiency in operations is not adversely affected.