Which One of the Following Statements Is NOT Correct

question 116

Multiple Choice

Which one of the following statements is NOT correct?

• A) It would be unusual to use both a narrative and a flowchart to describe the same system.
• B) The advantage of the narrative description is the ease of describing the details of the internal controls.
• C) The use of both questionnaires and flowcharts on the same engagement is highly desirable for understanding the client's system.
• D) When reliable and understandable narratives, flowcharts, and questionnaires are available from the client, it is desirable to use them rather than have the auditor prepare his or her own documents.

---

Definitions:

Cost Behavior

Cost behavior analyzes how different costs change or remain stable in relation to the level of production or business activity.

Managerial Decision Making

The process by which managers and leaders of an organization make choices and strategies to achieve organizational goals.

Relevant Range

The range of activity over which changes in cost are of interest to management.

Cost Behavior

Cost behavior refers to how different types of production costs change when there is a change in the level of production activity.