Internal Control Tests Are Performed to Determine If a Control

question 21

Multiple Choice

Internal control tests are performed to determine if a control that has been identified is working.

• A)Usually the test objective is to determine whether the control is effective.
• B)Usually the test objective is to determine whether the control is efficient.
• C)Usually the test objective is to determine whether the control is present.
• D)Usually the test objective is to determine whether the control is reliable.

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Definitions:

Homogenous Product

Goods that are identical in quality and cannot be distinguished from one another by consumers.

Barriers To Entry

Obstacles that prevent new competitors from easily entering an industry or area of business, such as high start-up costs or complex regulations.

Economic Profits

Profits exceeding the opportunity costs of the inputs used in the production process, an indicator of efficiency and effectiveness in resource utilization.

Mean Reversion

Suggests that performance eventually moves back toward the mean or average.