Samples to Test Internal Control Procedures Are Intended to Provide

question 97

Multiple Choice

Samples to test internal control procedures are intended to provide a basis for an auditor to conclude whether:

• A)The control procedures are operating effectively.
• B)The financial statements are materially misstated.
• C)The risk of incorrect acceptance is too high.
• D)Overall materiality for planning purposes is at a sufficiently low level.

---

Definitions:

Fixed Cost

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Collection Period

The time frame it takes for a business to convert its credit sales into cash, reflecting how efficient a company is at collecting accounts receivable.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time. It is used to evaluate the profitability of an investment or project.