In Evaluating Residual Risk of Account Balances,tests of Controls by the Auditor

question 80

Multiple Choice

In evaluating residual risk of account balances,tests of controls by the auditor involves the assessment of

• A)the design of controls.
• B)the operation of controls.
• C)the strength of the control environment.
• D)all of the above

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Definitions:

Standards

Predetermined benchmarks or norms used for measuring performance or ensuring consistency and quality in various fields.

Standard Cost System

A cost accounting system that estimates costs based on standard efficiency and material usage rates, then compares them with actual costs to identify variances.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard cost allocated, based on the actual activity levels.

Manufacturing Overhead

All manufacturing costs except direct materials and direct labor.