Suppose an Auditor Is Preparing for an Audit of the Payroll

question 128

Multiple Choice

Suppose an auditor is preparing for an audit of the payroll process of an entity and has identified that the entity is labor-intensive and depends largely on hourly compensation.The auditor still needs to understand all of the following about the entity, EXCEPT _______.

• A)The capital intensiveness of the entity
• B)The importance of bonuses or other compensation arrangements
• C)The level of variability of pay throughout the period
• D)None of the answer choices are correct.

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Definitions:

Credit Manager

A Credit Manager is a professional responsible for overseeing a company's credit policies, assessing creditworthiness, and managing credit lines.

Carrying Costs

The total cost of holding inventory, including storage, insurance, spoilage, and opportunity costs.

Shortage Costs

Costs incurred from not having enough inventory to meet demand, including lost sales and customer dissatisfaction.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or the normal operating cycle, whichever is longer.