Certain Types of Misstatements That Affect Cash May Be Detected

question 41

Multiple Choice

Certain types of misstatements that affect cash may be detected in the audit of tests of controls.Which of the following misstatements would be detected in the audit of the sales and collection cycle?

• A)a defalcation of cash hidden by an unauthorized write-off of a bad debt
• B)accidental duplicate payment of a vendor's invoice
• C)payment for raw materials that were not received
• D)payment to an employee at an incorrect wage rate

---

Definitions:

Activity-based Costing

A methodology that assigns manufacturing overhead costs to products in a more logical manner based on the activities that incur costs.

Floral Bouquets

An arrangement of flowers, typically designed and wrapped for decorative or gifting purposes.

Plantwide Overhead Rate

A single overhead absorption rate used throughout an entire plant or factory, applied to all production units equally.

Activity-based Costing

A costing method that allocates overhead costs to specific activities, providing more accurate product costing.