What Is the First Phase in an Audit

question 118

Multiple Choice

What is the first phase in an audit?

• A)Client acceptance or client continuance.
• B)Understanding the client.
• C)Understanding internal controls.
• D)Testing of account balances.

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Definitions:

Raw Materials

The basic materials from which products are manufactured or made, typically unprocessed or only minimally processed.

Purchase of Raw Materials

The cost incurred by a company to acquire the basic materials necessary for production.

Overapplied Manufacturing Overhead

Occurs when the manufacturing overhead allocated to products is more than the actual manufacturing overhead costs incurred.

Cost of Goods Sold

The immediate expenses related to the manufacturing of products a company sells, encompassing both materials and labor costs.