Which Type of Audit Evidence Can the Auditor Use in Support

question 99

Multiple Choice

Which type of audit evidence can the auditor use in support of the ownership of noncurrent assets audit objective?

• A) Examine title for ownership of asset
• B) Examine invoice from vendor
• C) Physical examination
• D) Direct confirmation with vendor

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Definitions:

Replacement Cost

The cost to replace an item or asset at current prices, disregarding its original purchase price or accumulated depreciation.

Operating Margin

A profitability measure calculated as operating income divided by revenue, showing the percentage of profits generated from operations before taxes and interest.

Variable Costing

An accounting method that only includes variable production costs (costs that change with the level of output) in the cost of goods sold and treats fixed costs as period costs.

Absorption Costing

A pricing technique that integrates all expenses related to production, such as direct materials, direct labor, along with both variable and fixed overhead costs, into a product's cost.