An Advantage of Using Systems Flowcharts to Document Information About

question 59

Multiple Choice

An advantage of using systems flowcharts to document information about internal control instead of using internal control questionnaires is that systems flowcharts

• A) Identify whether segregation of duties prevent collusion.
• B) Provide a visual depiction of clients' activities.
• C) Indicate whether controls are operating effectively.
• D) Reduce the need to observe clients' employees performing routine tasks.

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Definitions:

Break-Even Point

The level of sales at which total revenues equal total expenses, resulting in neither profit nor loss.

Variable Costs

Expenses that fluctuate in direct proportion to changes in levels of production or sales, such as materials and labor.

Fixed Costs

Expenses that do not change with the level of production or sales volumes, remaining constant regardless of the company's activity levels.

Margin Of Safety

The difference between actual sales and the break-even point. It measures how much sales can fall before a business incurs a loss.