Arizona State University (ASU) ACC231 Uses of Accounting Information I Exam 2 Practice

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What are internal controls designed to ensure?

Maximization of profits

Integrity of financial reporting

Internal controls are fundamental processes and procedures that organizations implement to ensure the integrity of their financial reporting. By establishing strong internal controls, a company aims to prevent errors and fraud in financial statements, ensuring that the information presented is accurate and reliable. This is crucial for maintaining stakeholder trust and compliance with regulations.

While maximizing profits, minimizing expenses, and reducing marketing costs can be important business objectives, they are not the primary purpose of internal controls. These controls focus specifically on safeguarding assets, ensuring reliable financial reporting, and promoting operational efficiency, which ultimately supports the accuracy of financial data. Therefore, integrity of financial reporting is at the heart of what internal controls are designed to achieve.

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Minimization of expenses

Reduction of marketing costs

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