The Objective of Tests of Details of Transactions Performed as Tests

question 430

Multiple Choice

The objective of tests of details of transactions performed as tests of controls is to:

• A) Monitor the design and use of entity documents such as prenumbered shipping forms.
• B) Determine whether internal controls have been implemented.
• C) Detect material misstatements in the account balances of the financial statements.
• D) Evaluate whether internal controls operated effectively.

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Definitions:

Investment

The allocation of resources, usually money, in the expectation of generating an income or profit.

Compounded Semiannually

Interest that is computed and appended to the original amount semi-annually.

Effective Rate

The actual interest rate that an individual earns or pays on an investment, loan, or other financial product, after compounding and other factors are taken into account.

Car Loan

A financial loan specifically used to purchase a car, typically secured by the car itself as collateral.