An Auditor Would Be Most Likely to Identify a Contingent

question 536

Multiple Choice

An auditor would be most likely to identify a contingent liability by obtaining a (an) :

• A) Accounts payable confirmation.
• B) Transfer agent confirmation.
• C) Standard bank confirmation.
• D) Related party transaction confirmation.

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Definitions:

Standard Costs

A predetermined cost of manufacturing, distributing, or selling products or services, which is used for budgeting and assessing performance.

Manufacturing Overhead

The indirect costs associated with manufacturing, not directly assignable to a specific product, such as factory rent, utilities, and equipment maintenance.

Cash Account

An account that records cash transactions, including cash received and cash paid out, within a business.

Direct Labor

The wages of employees who are directly involved in the production of goods or delivery of services.