Short Answer Types Questions (SAQ) [1 Mark each]
1. Define Internal control system.
Answer: As per SA-315 of the Institute of Chartered Accountants of India, “Internal control is a process that is designed, implemented and operated by those persons who are involved in the governance and management of the organisation and who make a reasonable commitment to the realisation of the objectives of the organisation.”
2. Mention any two objectives of Internal control system.
Answer: Two objectives of internal control are :
(i) Detection and prevention of errors and fraud.
(ii) Assurance about the reliability of accounting.
3. Mention two advantages of Internal control system.
Answer: Two advantages of Internal control system are :
(i) This system increses the efficiency of workers.
(ii) This system enables identification of unskilled workers.
4. What do you mean by Internal check system?
Answer: An internal check means practically a continuous internal audit carried on by staff itself, by means of which the work of each individual is independently checked by other members of the staff.
5. Mention two objectives of Internal check system.
Answer: Two objectives of Internal Check system are –
(i) Through this it is possible to detect and prevent errors and fraud in financial transactions.
(ii) Through this the efficiency of the employees increases.
6. Mention two advantages of Internal check system.
Answer: Two advantages of Internal check system are :
(i) Through this, errors and frauds can be detected quickly.
(ii) It is possible to complete the work on time.
7. State one limitation of Internal check system.
Answer: One limitation of Internal check system is – this system is costly.
8. Write one advantage of Internal check system from the auditor’s point of view.
Answer: One advantage of Internal check system from the auditor’s point of view is – Auditing works can be completed quickly.
9. Write one difference between Internal control system and Internal check system.
Answer: With the help of internal control system, company managers control all the activities of the business.
On the other hand, through internal check system, the work of the organisation is distributed among the employees in such a way that the work of one is independently checked by another.
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