The Purpose of Tests of Controls Is to Provide Reasonable

question 34

Multiple Choice

The purpose of tests of controls is to provide reasonable assurance that the

• A) accounting treatment of transactions and balances is valid and proper.
• B) internal control procedures are functioning as intended.
• C) entity has complied with GAAP disclosure requirements.
• D) entity has complied with requirements of quality control.

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Definitions:

Recession of 2001

A brief economic downturn in the United States that began in March 2001 and ended in November 2001, marked by the bursting of the dot-com bubble.

Subprime Mortgage Market

A segment of the mortgage market that caters to individuals with poor credit histories who are considered higher risk borrowers.

Low-income Individuals

persons or groups with earnings significantly below the median level of income for their society or geographic area.

Interest Rate Ceilings

A regulatory measure that sets the maximum interest rate that can be charged on loans and other financial products.