Audits of State and Local Governments May Be Performed by All

question 21

Multiple Choice

Audits of state and local governments may be performed by all of the following except:

• A) Independent CPAs.
• B) State audit agencies.
• C) Federal grantor agencies.
• D) The Office of Management and Budget (OMB).

Understand the difference between direct and indirect costs in cost allocation.

Comprehend the concept of a normalized overhead rate and its calculation.

Identify various methods for allocating overheads in manufacturing environments.

Calculate the predetermined manufacturing overhead rate.

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Definitions:

Fees Earned

Revenue recognized by a company for services provided during a specific period, even if not yet received in cash.

Real Account

Permanent accounts in accounting that are not closed at the end of the accounting period, including assets, liabilities, and equity accounts.

Nominal Account

Refers to accounts that track revenues, expenses, gains, and losses; these accounts are closed at the end of each accounting period.

Ledger Accounts

These are individual accounts in accounting that record transactions related to a company's assets, liabilities, equity, revenue, and expenses in a double-entry bookkeeping system.