QuestionJuly 11, 2025

How do internal controls affect the prevention of errors in financial reporting? a. They ensure all employees are trained b. They reduce the risk of errors and misstatements c. They decrease the need for special journals d. They increase manual transaction recording

How do internal controls affect the prevention of errors in financial reporting? a. They ensure all employees are trained b. They reduce the risk of errors and misstatements c. They decrease the need for special journals d. They increase manual transaction recording
How do internal controls affect the prevention of errors in
financial reporting?
a. They ensure all employees are trained
b. They reduce the risk of errors and misstatements
c. They decrease the need for special journals
d. They increase manual transaction recording

Solution
4.3(192 votes)

Answer

b. They reduce the risk of errors and misstatements Explanation 1. Identify the Purpose of Internal Controls Internal controls are designed to ensure accuracy and reliability in financial reporting by reducing errors and misstatements. 2. Evaluate Each Option a. Training employees is not the primary function of internal controls. b. Reducing the risk of errors and misstatements aligns with the purpose of internal controls. c. Decreasing the need for special journals is not directly related to internal controls. d. Increasing manual transaction recording is contrary to the efficiency goals of internal controls.

Explanation

1. Identify the Purpose of Internal Controls<br /> Internal controls are designed to ensure accuracy and reliability in financial reporting by reducing errors and misstatements.<br /><br />2. Evaluate Each Option<br /> a. Training employees is not the primary function of internal controls.<br /> b. Reducing the risk of errors and misstatements aligns with the purpose of internal controls.<br /> c. Decreasing the need for special journals is not directly related to internal controls.<br /> d. Increasing manual transaction recording is contrary to the efficiency goals of internal controls.
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