After Considering a Client's Internal Controls, an Auditor Has Concluded

question 44

Multiple Choice

After considering a client's internal controls, an auditor has concluded that they are well designed and are functioning as intended.Under these circumstances the auditor would most likely:

• A) not increase the extent of predetermined substantive tests.
• B) determine whether transactions are recorded to permit preparation of financial statements in conformity with generally accepted accounting principles.
• C) perform reduced tests of controls to the extent outlined in the audit program.
• D) determine the control procedures that should prevent or detect errors and irregularities.

---

Definitions:

Output Sold

The quantity of a company's products or services that have been purchased by customers.

Market System

Investment, production, and distribution closely follow supply and demand directives in this economic system, which allows for the free fluctuation of goods and services prices within an unrestricted price system.

Total Revenues

The overall income received by a firm from selling its goods or services, calculated as the price of the good multiplied by the quantity sold.

Total Costs

The sum of all costs associated with producing a good or service, including both fixed and variable costs.