Which of the Following Is Not an Example of an Initial

question 26

Multiple Choice

Which of the following is not an example of an initial procedure to be performed before other substantive tests are performed?

• A) Tracing beginning balances in the general ledger to the closing balances in the prior year's trial balance.
• B) Summing and agreeing detail balances in subsidiary ledgers to the general ledger.
• C) Referring to prior year's workpapers.
• D) Understanding the economic substance of transactions.
• E) Ascertaining the accounting principals used in the preceding period.

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Definitions:

Materials Price Variance

The difference between the actual cost of materials and the standard cost multiplied by the actual quantity used.

Standard Price

The anticipated or predetermined cost of a product, often used as a reference for evaluating actual costs.

Gallons

A unit of measurement for volume, commonly used to measure liquids.

Direct Labor Price Variance

A measure used in managerial accounting to calculate the difference between the actual cost of direct labor and the expected (or standard) cost, affecting the overall cost of production.