Which of the Following Statements Is Correct

question 8

Multiple Choice

Which of the following statements is correct?

• A) Auditors must obtain bank confirmations for audits of nonpublic entities.
• B) Auditors are required to obtain bank confirmations under international auditing standards.
• C) Auditing standards do not address specific requirements regarding bank confirmations.
• D) Auditing standards do not require bank confirmations.

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Definitions:

Variable Costing

A method of inventory costing that includes only variable manufacturing costs - direct materials, direct labor, and variable manufacturing overhead - in the cost of a product.

Net Operating Income

Income from a company's operations, calculated by subtracting operating expenses from operating revenue, excluding income and expenses from non-operating activities.

Gross Margin

The difference between sales revenue and the cost of goods sold, expressed as a percentage of sales revenue, indicating the efficiency of a company in managing its production and labor costs.

Net Operating Income

A company's revenue minus its operating expenses, excluding taxes and interest, providing a measure of profitability from its core business activities.