Substantive Tests Must Be Designed to Tests Specific Audit Objectives

question 52

Multiple Choice

Substantive tests must be designed to tests specific audit objectives.
REQUIRED: For the following specific audit procedures, indicate the assertion that is being tested. Use the following letters, placing your response in the space provideD.
-Observe procedures, including segregation of duties, for approving sales orders.

• A)Existence or occurrence
• B)Completeness
• C)Valuation or allocation
• D)Rights and obligations
• E)Presentation and disclosure

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Definitions:

Conversion Cost

Conversion cost is the combination of labor and manufacturing overhead costs incurred to convert raw materials into finished goods.

Equivalent Unit

A concept used in process costing that converts partially completed units into a number of fully completed units.

Factory Overhead

encompasses all the indirect costs associated with manufacturing, excluding direct labor and direct materials, such as utilities, depreciation, and maintenance.

Work In Process Inventory

Goods that are in various stages of the production process but are not yet completed products.