You Are Performing the Audit of Internal Control for Clifton

question 41

Multiple Choice

You are performing the audit of internal control for Clifton Company.Which of the following would represent a material weakness in internal control?

• A)The company's audit committee has experienced unusual turnover of members.
• B)The company's CFO was indicted for embezzling from the company.
• C)Bank reconciliations are done monthly.
• D)The CEO retired after twenty years of service to the company.

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Definitions:

Conversion Costs

The aggregate expenditure on direct labor and manufacturing overheads used for turning raw materials into final products.

Frosting

In a culinary context, a sweet and fluffy coating or filling, usually made from sugar, butter, and flavorings, used to decorate or fill cakes and pastries. If referring to a financial term, there is no widely recognized definition fitting "frosting."

Prime Costs

The direct costs directly attributable to the production of goods, including direct materials and direct labor.

Conversion Costs

The total expenses of direct labor plus manufacturing overheads spent in transforming raw materials into completed goods.