A Typical Objective of an Operational Audit Is for the Auditor

question 11

Multiple Choice

A typical objective of an operational audit is for the auditor to

• A)determine whether the financial statements fairly present the entity's operations.
• B)evaluate the feasibility of attaining the entity's operational objectives.
• C)evaluate the effectiveness of an internal process.
• D)report on the entity's relative success in attaining profit maximization.

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Definitions:

Average Cost

refers to the total cost of production divided by the number of units produced, also known as unit cost.

Cost Of Goods Sold

Cost of goods sold (COGS) is the direct cost attributed to the production of the goods sold by a company, including material and labor costs, but excluding indirect expenses.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated by adding new purchases to beginning inventory and subtracting cost of goods sold.

Perpetual Inventory Account

An accounting method that records inventory purchases and sales in real time, providing a continuously updated inventory balance.