If the Results of Tests of Controls Support the Design

question 20

Multiple Choice

If the results of tests of controls support the design and operations of controls as expected, the auditor uses ________ control risk as the preliminary assessment.

• A) a lower
• B) the same
• C) a higher
• D) either a lower or higher

---

Definitions:

Activity-based Costing

A costing methodology that assigns costs to products or services based on the resources they consume.

First-stage Allocation

The initial process of assigning indirect costs to relevant cost objects or activities, typically in a cost accounting system.

Activity-based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing a more accurate picture of the cost to produce a product or service.

First-stage Allocation

The process in cost accounting of assigning overhead costs to various cost pools before they are allocated to products or services.