Auditors Are Especially Concerned with Three Aspects of Internal Control

question 40

Multiple Choice

Auditors are especially concerned with three aspects of internal control for the sales and collection cycle.Which of the following is not one of their major concerns?

• A)Controls over cutoff
• B)Controls that prevent or detect embezzlements
• C)Controls over sales discounts
• D)Controls related to the allowance for uncollectible accounts

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Definitions:

Overapplied

Refers to a situation where the allocated costs exceed the actual overhead expenses incurred.

Manufacturing Overhead Cost

All indirect costs associated with manufacturing beyond direct materials and direct labor, such as utilities, depreciation, and factory equipment maintenance.

Indirect Labor Cost

Expenses relating to employees who do not directly participate in the production of goods but support the production process.

Factory Insurance

Insurance coverage specifically designed to protect manufacturing facilities and their contents from risks such as fire, theft, and natural disasters.