When Testing a Computerized Accounting System, Which of the Following

question 53

Multiple Choice

When testing a computerized accounting system, which of the following is false regarding the test data approach?

• A)The test data need to consist of only those valid and invalid conditions in which the auditor is interested.
• B)Only one transaction of each type needs be tested.
• C)Test data are processed by the entity's computer programs under the auditor's control.
• D)The test data must consist of all possible valid and invalid conditions.

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Definitions:

Shutting Down

The short-run decision by a firm to cease production due to market conditions, though it may resume operations in the future.

Variable Cost

Costs that vary in proportion to the level of production or business activity.

Total Revenue

The full amount of income generated by the sale of goods or services before any expenses are subtracted.

AVC Curve

The Average Variable Cost (AVC) Curve graphically represents how the cost per unit changes as the level of output is altered, typically showing a U-shaped curve due to economies and diseconomies of scale.