Tests of Controls in the Finance and Investment Cycle

question 59

Multiple Choice

Tests of controls in the finance and investment cycle:

• A)normally focus on tests of transactions.
• B)primarily involve observing physical security of assets.
• C)typically amount to inquiries and observations related to management involvement.
• D)can significantly reduce the extent of substantive tests.

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Definitions:

OCF

Operating Cash Flow, which measures the cash generated by a company's regular business operations.

Sales

The activities involved in selling goods or services to consumers or other businesses.

Sunk Costs

Costs that have already been incurred and cannot be recovered or altered by any present or future decisions.

Fixed Period

A specified duration of time during which certain conditions or rules are applied or must be followed.