A Transaction-Level Internal Control Activity Is Best Described as

question 37

Multiple Choice

A transaction-level internal control activity is best described as

• A) An action taken by auditors to obtain evidence.
• B) An action taken by client personnel for the purpose of preventing, detecting, and correcting errors and frauds in transactions to eliminate or mitigate risks identified by the company.
• C) A method for recording, summarizing, and reporting financial information.
• D) The functioning of the board of directors in support of its audit committee.

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Definitions:

Variable Costs

Expenditures that adjust based on the quantity of production or the scale of sales.

Utility Rates

Charges imposed by utility companies for the use of services such as electricity, gas, water, and sewer.

Contribution Margin

The amount by which the sale of a product or service exceeds its variable costs, used to cover fixed costs and contribute to net income.

Fixed Costs

Expenses that do not change with the level of production or sales over a relevant period, such as rent, salaries, and insurance.