In Identifying Matters for Communication with Those Charged with Governance

question 885

Multiple Choice

In identifying matters for communication with those charged with governance, an auditor most likely would ask management whether:

• A) The turnover in the accounting department was unusually high.
• B) It consulted with another CPA firm about accounting matters.
• C) There were any subsequent events of which the auditor was unaware.
• D) It agreed with the auditor's assessed level of control risk.

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Definitions:

Process Costing System

An accounting methodology used to allocate costs to products that are similar and produced continuously.

Weighted-Average Method

An inventory costing method that averages the cost of goods available for sale, used to determine the cost of goods sold and ending inventory.

Mixing Department

A specific section within a manufacturing setup where materials are combined to produce a product.

Equivalent Units

An approach in process costing that transforms units that are only partly finished into an equivalent number of entirely completed units, facilitating accounting procedures.