Which of the Following Is Likely to Be of Least

question 34

Multiple Choice

Which of the following is likely to be of least importance to an auditor in obtaining an understanding of the internal control?

• A) The segregation of duties within the IT centre.
• B) The control over source documents.
• C) The documentation maintained for accounting applications.
• D) The cost-benefit ratio of data processing operations.

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Definitions:

Periodic Inventory System

A method of inventory valuation for financial accounting purposes where a physical count is performed at specific intervals to determine the ending inventory balance and the cost of goods sold.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts and prepare the company’s books for the next accounting period.

Merchandise Inventory

Goods that a company holds in stock with the intent to sell them as part of its business operations.

Purchase Discount

A reduction in the price of goods that a buyer can avail of for making early payments to the seller.