Which of the Following Would the Auditor Use to Determine

question 52

Multiple Choice

Which of the following would the auditor use to determine the existence of investments?

• A) Footing the schedule of recorded investments.
• B) Confirming or examining recorded investments.
• C) A schedule of investments sold during the year.
• D) Recomputing interest and/or gains and losses.

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Definitions:

Net Operating Income

A measure of a company's profitability, calculated by subtracting operating expenses from gross profit.

Variable Costing

A costing method that includes only variable production costs (material, labor, and overhead) in the cost of manufactured goods, treating fixed overhead costs as period expenses.

Unit Product Cost

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

Net Operating Income

The profit calculated after all operating expenses are subtracted from total revenue but before interest and taxes are deducted.