Which of the following statements about internal controls are correct?
A)It is possible to have perfect (materially correct)financial statements and no internal controls.
B)It is not possible to have perfect internal controls and materially incorrect financial statements.
C)Testing internal controls answers the question,"Are the financial statements correct?" It only answers the question,"Are the controls working to prevent or detect misstatements in the financial statements?"
D)Substantive tests answer the question,"Are the account balances correct?"
E)Both A and B
F)Both A and D
G)Both B and D

Question

Quizplus · Accepted Answer

Statement A is correct because financial statements can be materially correct by chance or due to other factors even if internal controls are absent. Statement D is correct because substantive tests are designed to verify the accuracy of account balances.

Which of the Following Statements About Internal Controls Are Correct