In Performing Tests of Details of Balances, the Auditor Would

question 44

Multiple Choice

In performing tests of details of balances, the auditor would obtain the bank statement directly from the bank, prepare the bank reconciliation, and verify all reconciling items and mathematical accuracy if detection risk was:

• A) very high.
• B) high.
• C) moderate.
• D) low.
• E) very low.

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Definitions:

Forming Department

A specific division within a manufacturing environment where materials undergo the initial stages of production.

Equivalent Unit

A measure used in cost accounting to represent a partial unit of production, allowing for the comparison and calculation of costs for partially completed goods.

Process Costing

An accounting method used for homogenous products, allocating costs across units of production, making it easier to compute the cost per unit.

Conversion Costs

Costs required to convert raw materials into finished products, including direct labor and manufacturing overhead.