Which of the Following Statements Is True

question 41

Multiple Choice

Which of the following statements is true?

• A)Testing of controls is the most cost-efficient way of designing each audit.
• B)Substantive testing is the most cost-efficient way of designing each audit.
• C)As the work of testing of controls increases,the cost of substantive work increases.
• D)There is a point where further testing of controls becomes more expensive than performing substantive tests.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor costs.

Bond Interest Expense

Bond interest expense is the cost incurred by an issuer of bonds due to periodic interest payments made to bondholders.

Carrying Amount

The value at which an asset is recognized on the balance sheet after deducting any accumulated depreciation and impairment charges.

Bonds Payable

Bonds payable are long-term liabilities that represent funds borrowed by a company from investors, to be repaid with interest at a future date.