A Substantive Strategy Differs from a Reliance Strategy in That

question 65

Multiple Choice

A substantive strategy differs from a reliance strategy in that a substantive strategy includes:

• A)increased implementation of detailed tests of transactions and balances.
• B)extra tests of controls.
• C)increased emphasis on verbal representations from management.
• D)setting control risk at a minimum level.

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Definitions:

Bond Liability

A financial obligation represented by a bond, which a company or government must repay to bondholders on a specific date along with interest payments.

Operating Capability

The ability of a company to maintain efficient operations and produce goods or services at a consistent level of quality.

Physical Capacity

A measure of the maximum amount of work or production an asset can achieve in a certain period under normal conditions.