What Does the Effectiveness of Internal Controls Influence

question 90

Multiple Choice

What does the effectiveness of internal controls influence?

• A)Inherent risk.
• B)Control risk.
• C)Risk of material misstatement.
• D)Both B and C.

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Definitions:

Variable Overhead

Costs that change in proportion to the level of activity or volume of production in a company.

Direct Labor

The wages and benefits paid to employees who are directly involved in the production of goods or delivery of services.

Direct Materials

Raw materials that are directly traceable to the production of goods, considered a variable cost.

Fixed Overhead

Indirect costs or expenses that remain relatively constant regardless of the level of production or business activity.