Question

A strong internal control structure:

A) Contributes to the accuracy and verify ability of the accounting records.
B) Will prevent a business from operating at a loss.
C) Ensures a business will remain solvent.
D) Will prevent fraud, theft, and embezzlement.

Answer 1

A) Contributes to the accuracy and verify ability of the accounting records.

A strong internal control structure contributes to accuracy and verifiability of accounting records, helps prevent fraud and theft, and promotes financial stability and solvency in a business.

Step-by-step explanation:

A strong internal control structure contributes to the accuracy and verifiability of the accounting records. It helps to prevent and detect errors, irregularities, and fraud in financial reporting. Internal control measures such as segregation of duties, authorization and approval processes, and regular monitoring and reconciliations can enhance the reliability of financial information.

While a strong internal control structure can minimize the risk of fraud, theft, and embezzlement, it cannot completely eliminate the possibility. However, it acts as a deterrent and increases the likelihood of early detection and timely response to any fraudulent activities.

Internal controls also contribute to the overall efficiency and effectiveness of business operations. By ensuring compliance with laws and regulations, protecting company assets, and promoting accountability and transparency, internal controls help businesses maintain their financial stability and solvency.