The First General Standard of the PCAOB Requires That an Audit

question 56

Multiple Choice

The first general standard of the PCAOB requires that an audit be performed by which type of person?

• A) An auditor with seasoned judgment in varying degrees of supervision and review.
• B) An auditor with appropriate technical training and proficiency.
• C) An auditor with adequate knowledge of the standards of field work and reporting.
• D) An auditor satisfying the independence standards.

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Definitions:

Absorption Costing

An accounting method that captures all the manufacturing costs, including both fixed and variable costs, associated with producing a specific product.

Fixed Manufacturing Overhead

Costs associated with manufacturing that do not vary with the level of production, such as rent, salaries of supervisors, and depreciation of factory equipment.

Variable Costing

An accounting method that includes only variable production costs--such as materials, labor, and overhead--in the cost of a unit of product.

Unit Product Cost

The total cost to produce one unit of a product, including materials, labor, and overhead.