One Approach to Audit Through the Computer to Test Controls

question 5

Multiple Choice

One approach to audit through the computer to test controls is to

• A)reprocess live data with generalized audit software.
• B)trace outputs to source documents to ensure documents have been processed correctly.
• C)use simulated data in an audit program to determine if similar controls are being used.
• D)reprocess live data and have the auditor compare the output with the previous output.

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overheads incurred in converting raw materials into finished goods.

Job Cost Sheets

Documents that record and track the direct materials, direct labor, and manufacturing overhead costs allocated to an individual job or project.

Manufacturing Overheads

Indirect costs related to the production process, including utilities, depreciation of machinery, and factory rent.

Finished Goods

Products that have undergone the manufacturing process and are ready for sale to consumers.