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

---

Definitions:

Conversion Costs

The sum of labor and overhead costs required to convert raw materials into finished products.

Equivalent Units

The product of the number of partially completed units and their percentage of completion with respect to a particular cost. Equivalent units are the number of complete whole units that could be obtained from the materials and effort contained in partially completed units.

Process Costing

A costing method used when homogeneous products are produced on a continuous basis.

Job-order Costing

A cost accounting system used to assign manufacturing costs to an individual product or batches of products, typically used in custom or varied production.