After Completing Tests of Key Controls,the Auditor Should Review the Results

question 15

Multiple Choice

After completing tests of key controls,the auditor should review the results and consider whether

• A)the planned degree of reliance on internal controls is justified.
• B)the audit evidence obtained from the study of internal controls can provide a reasonable basis for an opinion.
• C)further study of internal controls is likely to justify any restriction of tests of details of balances.
• D)sufficient knowledge has been obtained about the entity's entire internal control structure.

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Definitions:

Direct Materials

Basic substances used explicitly in the manufacturing of certain products or services.

Production Budget

A financial plan that outlines the cost of producing the goods or services a company plans to sell, including direct labor, materials, and overhead.

Denim Material

A durable, woven fabric commonly used for making jeans and other clothing items, characterized by its indigo blue color.

Budgeted Production

The planned amount of goods to be produced over a certain period, often based on demand forecasts.