In the Context of Assertions About Classes of Transactions and Events

question 106

Multiple Choice

In the context of assertions about classes of transactions and events for the period under audit, auditors considering occurrence gather evidence to verify that _______.

• A)a recorded transaction or event, such as a revenue or an expense item, actually took place and relates to the entity
• B)all transactions have been recorded and the financial statements are not understated or overstated because transactions have been omitted
• C)transactions and events have been recorded at appropriate amounts
• D)transactions and events have been recorded in the proper accounts

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Definitions:

Labor Price Variance

The difference between the actual cost of labor and the standard or budgeted cost of labor over a period.

Direct Labor Cost

The total cost of work done by employees who are directly involved in the manufacture of a product or in performing a service.

Balanced Scorecard Approach

A strategy performance management tool that incorporates financial and non-financial performance indicators to provide a more comprehensive view of an organization's health.

Capacity Utilization Perspective

An assessment of how effectively an entity uses its potential output capacity, measuring the extent to which it's achieving maximum efficiency.