Final answer:
True. A good system of internal control is important to make a company's accounting records foolproof. It includes measures such as segregation of duties, physical controls, and internal audits.
Step-by-step explanation:
True. A good system of internal control is important to make a company's accounting records completely foolproof. Internal control refers to the policies, procedures, and practices implemented by a company to safeguard its assets, ensure the accuracy of financial reporting, and prevent fraud. It includes measures such as segregation of duties, physical controls, and internal audits.
For example, segregating duties ensures that no one person has control over all aspects of a financial transaction. This reduces the risk of errors or fraud as it requires collusion between multiple individuals. Physical controls such as restricted access to inventory or cash storage areas help prevent unauthorized access and ensure the security of company resources.
Internal audits are another crucial component of internal control. They involve independent assessments of the company's financial processes and controls to identify any weaknesses or non-compliance. By regularly conducting internal audits, a company can detect and address any issues before they become significant problems.