Which of the Following Would an Auditor Most Likely Question

question 33

Multiple Choice

Which of the following would an auditor most likely question included in calculation of the overhead rate for a company that manufactures a product?

• A)Factory supervisor salary.
• B)Indirect materials.
• C)Machine hours.
• D)Selling expense.

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Definitions:

Redeemed

Usually refers to the repurchase or paying off of a debt or equity security at its original value or at a predetermined value before it matures.

Effective Interest Rate Method

The effective interest rate method is a technique for calculating the actual interest rate for a financial product over its life, considering compounding.

Bonds Payable

A long-term liability account that records the face value of the bonds a company is obligated to repay at a specified future date.

Contract Interest Rate

The rate of interest stated in a loan or credit agreement that must be paid on the principal by the borrower.