What Is a Concern About the Single Rule That Dictates

question 3

Multiple Choice

What is a concern about the single rule that dictates that control values must fall within two standard deviations of the mean?

• A) It can only be trusted when greater than ten different controls have been tested.
• B) It can trigger false alarms that cause rejection of acceptable runs.
• C) It is insufficient to detect errors created by compromised controls.
• D) It is only applicable to instruments previously calibrated by the International Standards Committee.

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Definitions:

Average Inventory

A calculation that reflects the average value of inventory over a certain period, often used for financial analysis.

Vertical Analysis

Vertical analysis is a financial analysis method that expresses each line item in a financial statement as a percentage of a base figure from the same statement, facilitating comparison.

Cost of Goods Sold

Expenditures directly linked to the production process of goods a company offers for sale, including labor and materials.

Short-term Creditor

An entity or individual that lends money with the expectation of repayment within a short period, typically within a year.