In Audits of Companies in Which Payroll Is a Significant

question 108

Multiple Choice

In audits of companies in which payroll is a significant portion of inventory, the improper account classification of payroll can:

• A) increase asset valuations.
• B) decrease asset valuations.
• C) either A or B
• D) not affect asset valuations.

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Definitions:

Cost Minimization

The process of reducing expenses to the lowest possible level while still achieving the desired level of production or activity.

Profit Maximization

Refers to the process or strategy focused on increasing the net profit of a business by either increasing revenue, reducing costs, or both.

Transportation Strategy

The planning and implementation of effective means to move goods and services from one location to another, aiming to optimize costs, efficiency, and reliability.

Competitive Strategy

A long-term plan of action designed to achieve a sustainable advantage over competitors.