Which of the Following Statements Is Incorrect

question 84

Multiple Choice

Which of the following statements is incorrect?

• A) The less frequently a control is performed, the more testing the auditor needs to perform to be satisfied the control is operating effectively.
• B) When other controls related to a particular objective are also in place and are tested, the level of assurance that might be needed from any one control is not as high as if the auditor were relying solely on a single control.
• C) The less frequently a control is performed, the less testing the auditor needs to perform to be satisfied the control is operating effectively.
• D) The results of the tests in prior audits and the current audit to date affect the perception of risk.

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Definitions:

Bankruptcy

A legal process through which individuals or businesses unable to meet their financial obligations can relieve their debts by transferring assets to a trustee.

Target Capital Structure

The optimal mix of debt, equity, and other financing sources that a company aims to achieve to minimize its cost of capital.

After-Tax Cost

The net cost of an investment after the reduction of any taxes that are applicable to it, reflecting the actual cost to the investor.

WACC

The Weighted Average Cost of Capital, a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.