If There Is a Deviation in the Statements' Preparation in Accordance

question 151

Multiple Choice

If there is a deviation in the statements' preparation in accordance with GAAP and another accounting principle was applied on a basis that was not consistent with that of the preceding year,

• A) the auditor must choose which modification to include in the audit report.
• B) only the most material modification can be disclosed.
• C) more than one modification should be included in the report.
• D) none of the above.

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Definitions:

High-low Method

An approach to estimate fixed and variable costs by using the highest and lowest levels of activity.

Monthly Production Volume

The total amount of goods produced by a manufacturer within a one-month period, indicating the scale of operations.

Total Cost

The complete cost of production, including both fixed and variable costs.

Mixed Cost

Expenses that have both fixed and variable components, changing with the level of production or sales activity.