When Controls "Work

question 36

Multiple Choice

When controls "work"

• A)the auditor increases the amount of substantive testing
• B)the auditor reduces the amount of substantive testing
• C)the auditor increases the amount of substantive testing over what would have been done if the control had been effective in preventing or detecting misstatements in the financial statements
• D)the auditor decreases the amount of substantive testing over what would have been done if the control had been effective in preventing or detecting misstatements in the financial statements
• E)the auditor reduces the amount of substantive testing over what would have been done if the control had not been effective in preventing or detecting misstatements in the financial statements

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Definitions:

Credit Sale

A transaction where goods or services are provided to a customer with the agreement that payment will be made at a later date.

Usable Form

A state in which information or data is organized and formatted in such a way that it can be easily understood and utilized by its intended users.

Debt Ratio

A financial ratio that measures the extent of a company's leverage, calculated by dividing total liabilities by total assets.

Total Debt

The sum of all financial obligations a company or individual owes to outside parties, which can include loans, bonds, mortgages, and other forms of debt.