If Control Risk Is Assessed at Maximum, Only Substantive Tests

question 74

True/False

If control risk is assessed at maximum, only substantive tests of transactions will be used by the auditor, assuming the audit is of a smaller public company, a nonpublic company, or other type of entity.

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Definitions:

Unadjusted Cost of Goods Sold

The initial calculation of the cost of goods sold that does not factor in any adjustments like returns or allowances.

Unadjusted Cost of Goods Sold

The initial calculation of the cost of products sold before any adjustments or corrections are made.

Total Manufacturing Cost

The aggregate of all costs—direct materials, direct labor, and manufacturing overhead—incurred in producing finished goods.

Raw Materials

are the basic, unprocessed inputs used in the manufacture of goods and products.