The Most Effective Audit Procedure for Determining If an Account

question 20

Multiple Choice

The most effective audit procedure for determining if an account receivable will be collected is:

• A)Examination of cash collections subsequent to the year end.
• B)Examination of sales invoice(s).
• C)Confirmation of the account.
• D)The review of the customer's file to determine previous collection experience and to check sales orders from the customer for evidence credit approval.

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Definitions:

Manufacturing Overhead

Costs incurred in the manufacturing process that are not directly tied to a specific product, including indirect materials, indirect labor, and other factory-related expenses.

Work In Process Inventory

An accounting inventory category that refers to partially completed goods still in the production process.

Finished Goods Inventory

Inventory consisting of fully finished goods that are prepared for sale but have not been purchased yet.

Cost Of Goods Manufactured

The total cost incurred by a company to produce goods within a specific period, including materials, labor, and overhead.