The Decision to Test Internal Controls for a Financial Statement

question 102

True/False

The decision to test internal controls for a financial statement audit is always based on whether it is an efficient way to gather evidence for the business process.

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Definitions:

Cash Flows

The full extent of money transactions processed by a business, considerably affecting its ability to liquidate assets.

Financial Assets

Assets that derive value because of a contractual claim, such as stocks, bonds, bank deposits, and other investments.

Future Cash Flows

The projected income and expenditures that a company expects to generate over a forthcoming period.

Legal Documents

Official papers that indicate agreement to terms, rights, and responsibilities, enforceable by law.