An Operational Audit Differs in Many Ways from an Audit

question 12

Multiple Choice

An operational audit differs in many ways from an audit of financial statements.Which of the following is the best example of one of these differences?

• A)The usual audit of financial statements covers the four basic statements,whereas the operational audit is usually limited to either the balance sheet or the income statement.
• B)Operational audits are more subjective and often involve evaluating efficiency and effectiveness of operations.
• C)Operational audits do not ordinarily result in the preparation of a report.
• D)The operational audit deals with pre-tax income.

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Definitions:

Net Operating Income

Earnings derived from a company's regular business activities, excluding deductions of interest and taxes.

Net Operating Income

Income from a company's operations, excluding taxes and interest, reflecting the profitability of the core business activities.

Unit Product Cost

The total cost associated with producing one unit of a product, including direct materials, labor, and allocated overhead.

Unit Product Cost

The total cost to produce one unit of a product, comprising both direct costs like materials and labor, and allocated indirect costs.