Question

Which one of the following is not an objective of a system of internal controls?

a. Safeguard company assets
b. Overstate liabilities in order to be conservative
c. Enhance the accuracy and reliability of accounting records
d. Reduce the risks of errors

Answer 1

Answer: Option B

Explanation: In simple words, internal controls refer to the set of activities that are performed by an organization with the objective of conducting business operations in an effective and approved manner.

Internal control helps top safeguard assets and prevention of fraud. It does not promote frauds like the overestimation of liabilities it actually tries to prevent it.