When Looking at Account Receivables Auditors Should Ensure

question 394

Multiple Choice

When looking at account receivables auditors should ensure:

• A) Receipts are processed and recorded timely
• B) Collections are handled by an outside party
• C) Disbursements are made right after the original authorizations
• D) Collections are handled by a brokerage house

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Definitions:

Budget Variance

Budget variance is the difference between the budgeted or planned financial activity and the actual financial performance.

Fixed Manufacturing Overhead

Costs associated with production that do not change with the level of output, such as rent, salaries, and equipment depreciation.

Budget Variance

Budget variance is the difference between the budgeted or planned amount of expense or revenue and the actual amount incurred or earned.

Standard Cost System

An accounting framework where predetermined costs are used for valuing inventories and measuring cost variances.