Maxi Sales Corp

question 26

Multiple Choice

Maxi Sales Corp. maintains a large, full-time internal audit staff that reports directly to the chief accountant. Audit reports prepared by the internal auditors indicate that the structure is functioning as it should be and that the accounting records are reliable. The external auditor will probably:

• A) eliminate tests of controls.
• B) increase the depth of the procedures to obtain an understanding of controls directed towards operating efficiency.
• C) avoid duplicating the work performed by the internal audit staff.
• D) place limited reliance on the work performed by the internal audit staff.

---

Definitions:

Consumption

The portion of income spent on goods and services rather than saved.

Billion

A number equivalent to one thousand million (1,000,000,000) or, in some number systems, a million million (1,000,000,000,000).

Saving

The portion of income not spent on current consumption but set aside for future use, often in a deposit account or as an investment.

Disposable Income

The sum of funds a family can use for expenditures and savings once income taxes are deducted.