The Purpose of Phase 3 in the "Process for Understanding

question 12

Multiple Choice

The purpose of phase 3 in the "process for understanding internal control and assessing control risk" is to:

• A)design, perform and evaluate tests of controls.
• B)obtain and document an understanding of internal control design an operation.
• C)assess control risk.
• D)decide planned detection risk and substantive tests.

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Definitions:

Productive Advantage

A situation where a person or entity can produce goods or services at a lower opportunity cost than others.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits one misses out on when choosing one option over another.

Bushel

A unit of volume that is used in the United States for measuring agricultural commodities, usually grains.

Bananas

A long, curved fruit with soft, pulpy flesh and yellow skin when ripe, commonly eaten as a staple food or snack.