Auditors Should Design Appropriate Tests of Internal Controls Over Cost

question 88

True/False

Auditors should design appropriate tests of internal controls over cost accounting records based upon their understanding of those records and the extent they will be relied upon for reducing substantive tests.

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Definitions:

Net Income

The remaining earnings of a firm once subtracting every expense and tax from its total income.

Extraordinary Item

Events or transactions that are distinct from the ordinary activities of a company, which are unusual in nature and infrequent in occurrence.

Income Statement

A financial statement that shows a company's revenues, expenses, and profits or losses over a specific period of time.

Unusual In Nature

Events or transactions that are not typical of the normal activities of the entity and thus not expected to recur frequently or regularly.