What Is the Role of Internal Controls During the Assessment

question 59

Multiple Choice

What is the role of internal controls during the assessment of inherent risk?

• A)Internal controls are considered separately,so they are ignored during the assessment of inherent risk.
• B)As the quality of internal controls increases,inherent risk decreases.
• C)As the quality of internal controls improves,inherent risk increases.
• D)There is a direct relationship between the quality of internal controls and inherent risk.

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Definitions:

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in an even manner.

Depreciation Tax Shield

The tax savings achieved by a company from the deductible expenses of depreciation, reducing its taxable income.

Present Value

The value today of a future sum of money or cash flow sequence, calculated using a defined rate of return.

CCA Class

A categorization in Canadian tax law that determines the depreciation rate for tax purposes on capital assets.