Which of the Following Statements Concerning Control Risk Is Correct

question 55

Multiple Choice

Which of the following statements concerning control risk is correct?

• A) Assessing control risk and obtaining an understanding of an entity's internal controls may be performed concurrently.
• B) When control risk is high, an auditor is required to document the basis for that assessment.
• C) Control risk may be assessed sufficiently low to eliminate substantive procedures for significant accounts.
• D) When assessing control risk, an auditor should not consider evidence obtained in prior audits about the operation of control activities.

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Definitions:

Job-Order Costing

Job-order costing is an accounting method that tracks costs individually by job or order, suitable for customized orders or distinct projects.

Direct Labour

Direct labour refers to the work of employees who are directly involved in the production of goods or the delivery of services, opposite to indirect labor.

Overhead

The general operating costs not directly tied to production, including administrative and facility expenses.

Direct Materials

Raw materials that are directly incorporated into a finished product and can be directly attributed to the product.