Management Has Several Responsibilities That Are Important to the Auditor

question 70

Multiple Choice

Management has several responsibilities that are important to the auditor.One of these is that management is responsible for

• A)internal controls that prevent material misstatements due to fraud or error.
• B)maintaining control of evidence (such as confirmations)until assessed by the auditor.
• C)evaluating evidence against acceptable criteria.
• D)providing reasonable assurance that the financial statements are fairly stated.

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Definitions:

Inventory Costs

Expenses associated with acquiring, storing, and managing inventory, including purchase prices, storage fees, and costs related to inventory spoilage or obsolescence.

FIFO Inventory

First-In, First-Out Inventory is an asset management and valuation method that assumes goods produced or acquired first are sold, used, or disposed of first.

LIFO Reserve

The difference between the cost of inventory calculated under the Last In, First Out (LIFO) method and its cost under the First In, First Out (FIFO) method.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including the cost of the materials and labor directly used to create the product.