Which of the Following Is a Correct Statement Regarding General

question 85

Multiple Choice

Which of the following is a correct statement regarding general controls?

• A)Auditors should evaluate the effectiveness of application controls before evaluating general controls.
• B)General controls have a pervasive effect on the effectiveness of application controls.
• C)Ineffective general controls have no impact on the potential for material misstatements across all system applications.
• D)General controls have no impact on audit testing.

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Definitions:

Overapplied Overhead

A situation where the estimated manufacturing overhead costs exceed the actual overhead costs incurred.

Underapplied Manufacturing Overhead

A situation where the allocated manufacturing overhead cost is less than the actual overhead cost incurred.

Estimated Total Manufacturing Overhead

The projected sum of all manufacturing costs (excluding direct labor and direct materials) expected to be incurred over a specific period.

Schedule of Cost of Goods Manufactured

A detailed statement listing the total costs incurred in the production process to arrive at the cost of goods manufactured.