Choice "C" is correct. Test data consists of "dummy" data run through the client's computer system. The data should be processed under the auditor's control.
Choice "a" is incorrect. Only transactions that the auditor wishes to test must be used.
Choice "b" is incorrect. While the auditor will frequently use many valid and invalid conditions, it is not feasible to test every possible valid and invalid condition using a test data approach.
Choice "d" is incorrect. The objective of the test data approach is to test programs that the client uses to process data. Using different programs defeats the primary purpose of the test.