After Finishing the Procedures to Obtain an Understanding of Internal

question 70

Multiple Choice

After finishing the procedures to obtain an understanding of internal control in an audit engagement,the auditor should perform tests of controls on

• A)those controls that the auditor plans to rely upon.
• B)those controls in which material weaknesses were identified.
• C)those controls that have a material effect upon the financial statement balances.
• D)a random sample of the controls that were reviewed.

---

Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs (both variable and fixed) in the cost of a product.

Unit Product Cost

The calculated cost associated with producing a single unit of product, including direct materials, labor, and overhead.

Absorption Costing

An accounting practice where the cost of a product is calculated by including all expenses from manufacturing, like direct materials, direct labor, and both variable and fixed overheads.

Unit Product Cost

The total cost (fixed and variable) assigned to a unit of product, determining its cost of production per unit.