Regarding the cost-benefit concept,which of the following statements is true?
A)Every control procedure that offers benefits to a company should be implemented into the company's system
B)An optimal internal control package is developed for a company's system by implementing a standardized package of control procedures
C)A control procedure is considered cost effective if it can be determined that the cost of operating the procedure will be lower in the current period than in the previous period
D)A control procedure is considered cost effective when its anticipated benefits exceed its anticipated costs

Question

Quizplus · Accepted Answer

The cost-benefit concept states that a control procedure is considered cost effective when its anticipated benefits exceed its anticipated costs. This means that implementing a control procedure should result in a net positive impact on the company's finances. Options A and B are incorrect because not all control procedures may offer benefits to a company and an optimal internal control package can differ for each company. Option C is incorrect because cost-effectiveness cannot be determined solely by comparing costs between periods, as external factors may change.

Regarding the Cost-Benefit Concept,which of the Following Statements Is True