Evidence of Fraud, Whether or Not Material, on the Part

question 7

True/False

Evidence of fraud, whether or not material, on the part of senior management, would likely cause the auditor to conclude that the client had a material weakness in internal control over financial reporting.

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Definitions:

Net Operating Income

The financial gain a company receives from its essential business operations, prior to the removal of interest and tax costs.

Variable Costing

Variable costing is an accounting method that only includes variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of a product.

Net Operating Income

The total profit of a company after all operating expenses are subtracted from total revenues but before deducting taxes and interest.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a unit of a product.