Which of the Following Statements Is Correct Concerning an Auditor's

question 946

Multiple Choice

Which of the following statements is correct concerning an auditor's use of the work of a specialist?

• A) The auditor need not obtain an understanding of the methods and assumptions used by the specialist.
• B) The auditor may not use the work of a specialist in matters material to the fair presentation of the financial statements.
• C) The reasonableness of the specialist's assumptions and their applications are strictly the auditor's responsibility.
• D) The work of a specialist who has a contractual relationship with the client may be acceptable under certain circumstances.

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Definitions:

Activity-Based Costing

A technique for determining the true cost of a product by assigning its share of overhead costs based on the specific activities it requires.

Overhead Cost

Indirect costs of running a business that can't be linked to specific products or services but are necessary for the business to operate.

Assembly Hours

The total hours spent on the assembly stage of the manufacturing process, often used in costing and performance measurement.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing more accurate insights into the true costs of production.