An Exception in a Test of Control Provides Only an Indication

question 116

True/False

An exception in a test of control provides only an indication of the likelihood of monetary misstatements in the financial statements because tests of controls do not reveal whether monetary misstatements have actually occurred.

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Definitions:

Depositary Bank

A bank that holds securities in its custody for depositors and facilitates the exchange and transactions of these securities.

Electronic Funds Transfer Act

A federal law that protects consumers engaging in the transfer of funds through electronic methods, ensuring their rights and establishing responsibilities for institutions.

Revised Article 4

An update or amendment to a section of the Uniform Commercial Code dealing primarily with bank deposits and collections.

Postdated Instrument

A financial instrument, such as a check, with a date in the future, indicating when it becomes payable.