When Undertaking Tests of Controls Which Are Related to Controls

question 12

Multiple Choice

When undertaking tests of controls which are related to controls built around a major transaction flow, which assertion would be of least interest to the auditor?

• A) Occurrence.
• B) Accuracy.
• C) Cut-off.
• D) Valuation or allocation.

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Definitions:

Contribution Margin

The amount by which a product's selling price exceeds its total variable costs, indicating how much contributes to covering fixed costs and generating profit.

Pretax Income

Earnings of a company before any tax is applied, calculated by deducting all operating expenses, including cost of goods sold and interest, from revenues.

Curvilinear Costs

Costs that change with the level of output but at a non-constant rate, displaying a curved relationship between cost and output.

Nonconstant Rate

Refers to a rate that changes over time, as opposed to a constant or fixed rate which remains the same.