When Auditing a Client Who Uses a Database Management System

question 142

Multiple Choice

When auditing a client who uses a database management system, the auditor is principally aware of elevated risk due to the fact that

• A) multiple users can access and update data files.
• B) the accounting information is only in one place.
• C) the database administrator may lack appropriate accounting knowledge.
• D) multiple users could all access the data simultaneously causing a system shutdown.

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Definitions:

Variable Costing

An accounting method in which fixed manufacturing overhead costs are not allocated to products, affecting stock valuation and profitability reporting.

Manufactured Quantity

Manufactured quantity refers to the total number of units produced by a company during a specified period.

Absorption Costing

A financial recording technique that encompasses all production expenses, such as raw materials, direct labor, and variable as well as fixed overheads, into the pricing of a product.

Operating Income

Profit generated from core business operations, excluding expenses such as taxes and interest.