The Most Reliable Evidence from Confirmations Is Obtained When They

question 41

Multiple Choice

The most reliable evidence from confirmations is obtained when they are sent

• A) as close to the balance sheet date as possible.
• B) at various times throughout the year to different segments of the sample, so that the entire sample is representative of account balances scattered throughout the year.
• C) several months before the year-end, so the auditor will have adequate time to perform alternate procedures if they are required.
• D) at various times throughout the year to the same group in the sample, so that the sample will not have a time bias.

---

Definitions:

Variable Cost Per Unit

The cost that varies with each unit of product produced, directly tied to the production volume, such as materials and labor.

Fixed Costs

Expenses that remain constant regardless of the level of production or sales, including items like rent, salaries, and insurance.

Contribution Margin Ratio

The percentage of sales revenue that exceeds variable costs, indicating how much sales contribute to fixed costs and profit.

Budgeted Sales

Projected sales figures that are estimated by a business for a future accounting period, used for planning and strategic purposes.