Q1RQ - Horngren'S Financial And Managerial Accounting

Question

What is internal control?

Step-by-Step Solution

Answer

Internal control refers to the plans or rules implemented by the business entities to promote the efficiency of business operationsand prevent fraud.

Step 1: Meaning of Internal Activities

Those activities that are done within a company and the company entirely controls these activities are known as a company's internal activities. The external environment does not affect the internal activities of the company.

Step 2: Meaning of internal control

All the measures adopted by the business entities to protect their assets, achieve operational efficiency, promote accountability, encourage employees to follow the company's rules, and prevent fraud.