The Main Difference Between Substantive Testing and Controls Testing Is

question 30

Multiple Choice

The main difference between substantive testing and controls testing is:

• A)Substantive testing verifies whether information is correct, whereas control tests determine whether the information is managed under a system that promotes correctness.
• B)Substantive testing determines whether the information is managed under a system that promotes correctness, whereas control testing verifies whether information is correct.
• C)Substantive testing goes further in depth into the internal controls of a company, whereas controls testing just identifies which controls need further review.
• D)Substantive testing identifies which controls need further review, whereas controls testing goes further in depth into the internal controls of a company.

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Definitions:

Other Comprehensive Income

Earnings that are not included in net income on the income statement and relate to gains and losses that have not yet been realized.

Retained Earnings

Retained earnings represent the cumulative amount of a company's profits that are reinvested in the business, rather than distributed to shareholders as dividends.

Bond Debenture

A type of debt instrument that is not secured by physical assets or collateral but backed by the general creditworthiness of the issuer.

Corporation Issues

Problems or challenges faced by a corporation, such as governance, regulatory compliance, or fiscal management.