Segregation of Duties Between Production,inventory Control,and Accounting Are Important Controls

question 27

Multiple Choice

Segregation of duties between production,inventory control,and accounting are important controls in the inventory and distribution cycle.How would the auditor test these controls?

• A)using inquiry and reperformance
• B)using observation and inquiry
• C)using observation and reperformance
• D)using discussion with management

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Definitions:

Cost of Selling Goods

The total expense directly incurred from the production or purchase of items sold by a business.

Cost of Goods Sold

An expense recorded on the income statement that reflects the total cost of producing or purchasing the goods that a company has sold during a specific period.

Cost of Goods Sold

Represents the total cost of all goods that were sold over a specific period, including the costs associated with production or purchase.

Gross Profit

The difference between revenue and the cost of goods sold (COGS), indicating the efficiency of a company in using its labor and supplies.