An Internal Auditor Is Testing Whether Payments to Outside Contractors

question 148

Multiple Choice

An internal auditor is testing whether payments to outside contractors have been charged to the proper account. Which of the following sampling methods would be most useful in completing this task?

• A) Haphazard sampling.
• B) Probability-proportional-to-size sampling.
• C) Attribute sampling.
• D) Judgmental sampling.

Understand the concept of job-order costing system and its application in accounting.

Calculate predetermined overhead rates and understand how they are used in applying manufacturing overhead to jobs.

Identify and analyze journal entries related to job-order costing operations, including material purchases, labor costs, and overhead application.

Understand the distinction between direct and indirect costs and how they are recorded in job costing.

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Definitions:

Debit

A debit is an accounting entry that results in either an increase in assets or a decrease in liabilities on a company's balance sheet, or in the context of personal banking, a withdrawal from an account.

Credit

An accounting entry reflecting an increase in assets or decrease in liabilities on a company's balance sheet or an entry on the right side of an account.

Drawing

In accounting, refers to the withdrawal of cash or goods by the owner from a business for personal use.

Account Group

An account group is a categorization of individual financial accounts in the general ledger that helps organize and report financial information.