Which of the Following Is True of the Influence of Significant

question 20

Multiple Choice

Which of the following is true of the influence of significant accounts and classes of transactions on inherent risk?

• A)When determination of account balance is objective, the inherent risk is low.
• B)When the transactions are routine and relatively homogenous, the inherent risk is high.
• C)When the account has high volume of transactions, the inherent risk is low.
• D)When the determination of an account balance is subjective, the inherent risk is low.

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Definitions:

Accounts Receivable Balance

The total amount of money owed to a company by its customers for goods or services delivered on credit.

Cost Of Goods Sold

The total of all costs used to create a product or service, which has been sold.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including the cost of materials and labor but not distribution or sales costs.

Budgeted Cost

An estimated cost anticipated for a specified period of time or activity.