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:

Statistical Tests

Procedures used in statistics to determine whether hypotheses about the distribution of data can be rejected, based on sample data.

Sample Size

The number of observations or subjects included in a study.

Effect Size

A quantitative measure of the magnitude of a phenomenon, used to indicate the size of an effect or difference found in a study.

Type I Error

The incorrect rejection of a true null hypothesis, or a "false positive," in hypothesis testing, indicating that the test suggests an effect that does not actually exist.