The Auditor Considers Internal Control by 4 Steps

question 63

Multiple Choice

The auditor considers internal control by 4 steps. What is the order for these steps? 1. Obtain an understanding of internal control.
2) Assess control risk.
3) Perform tests of controls.
4) Decide on planned detection risk and substantive testing.

• A) 4, 1, 2, 3
• B) 1, 2, 3, 4
• C) 1, 3, 2, 4
• D) 2, 1, 3, 4

---

Definitions:

Fixed Cost

Costs that do not change with the level of production or output, such as rent, salaries, and loan payments.

Variable Costs

Costs that change in proportion to the level of output or activity in a business.

Snow-clearing

The process of removing snow from surfaces like roads and walkways to ensure safe passage and transportation.

Perfectly Competitive

A market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to price-taking behavior.