Examples of Substantive Procedures Performed to Test the Reasonableness of Accounting

question 34

Multiple Choice

Examples of substantive procedures performed to test the reasonableness of accounting estimates include:

• A)Inquiry about the method of measurement
• B)Inquiry about assumptions used by management
• C)Recalculate the accounting estimate
• D)All of these answer choices are correct

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Definitions:

Future Costs

Expenses or expenditures that are expected to be incurred in future accounting periods.

Fixed Costs

Regular, constant expenses that a business incurs regardless of the level of goods or services produced.

Direct Materials

The raw materials that are directly used in the manufacturing of a product, which can be directly traced to the product itself.

Direct Labour

The wages and related benefits for workers who are directly involved in the manufacturing or production of goods.