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    Question

    Which of the following is an example of a "Test of

    Control" in an audit?
    A Physically verifying fixed assets. Correct Answer Incorrect Answer
    B Reconciling bank statements. Correct Answer Incorrect Answer
    C Checking whether purchase orders are duly approved. Correct Answer Incorrect Answer
    D Analytical review of gross profit ratios. Correct Answer Incorrect Answer

    Solution

    Tests of Control are performed to evaluate the operating effectiveness of internal controls. Checking if purchase orders are approved before processing is a test of the authorization control. The other options are substantive procedures.

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