When Testing a Computerized Accounting System, Which of the Following

question 53

Multiple Choice

When testing a computerized accounting system, which of the following is false regarding the test data approach?

• A)The test data need to consist of only those valid and invalid conditions in which the auditor is interested.
• B)Only one transaction of each type needs be tested.
• C)Test data are processed by the entity's computer programs under the auditor's control.
• D)The test data must consist of all possible valid and invalid conditions.

---

Definitions:

Manufacturing Overhead

All indirect costs associated with manufacturing, including indirect labor, materials, and other expenses.

Incremental Manufacturing Cost

The additional cost incurred to produce an extra unit of a product.

Contribution Format Income Statement

A format for income statements that divides fixed and variable expenses, emphasizing the margin of contribution.

Traditional Format Income Statement

A type of income statement where expenses are deducted from revenues to calculate net income, typically divided into operating and non-operating sections.