When Labour Is a Material Factor in Inventory Valuation, the Auditor

question 43

Multiple Choice

When labour is a material factor in inventory valuation, the auditor should place special emphasis on testing the internal controls concerning:

• A) proper classification of transactions.
• B) authorisation of wage rates.
• C) fictitious employees.
• D) completeness of recorded transactions.

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Definitions:

Nature and Roles

refers to the intrinsic characteristics of entities or individuals and the functions or positions they are expected to occupy in a system or society.

Dependence

The state of relying on or being controlled by someone or something else.

Incur Costs

To become subject to or bear expenses, often as a result of conducting activities, making decisions, or entering into transactions.

Norms and Values

Socially shared rules and expectations that guide behavior within a group, alongside the fundamental beliefs and ideals that bring a community together.