A Governmental Auditor Assigned to Audit the Financial Statements of the State

question 22

Multiple Choice

A governmental auditor assigned to audit the financial statements of the state highway department would not be considered independent if the auditor

• A)spouse was the CFO of the highway department.
• B)lived in the state and utilized the highway system on a daily basis.
• C)performed audits of the state budget that included funding to the highway department.
• D)reported the audit findings to the transportation committee of the state legislature.

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Definitions:

Year 2

Typically refers to the second year of a specific timeframe, such as a company's fiscal year or a multi-year study.

Variable Costing

A costing method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of a product.

Unit Product Cost

The total cost (both direct and indirect) allocated to a single unit of product, used in setting prices and assessing profitability.

Variable Costing

A method of inventory costing that includes only variable production costs (materials, labor, and variable overhead) in the cost of goods sold, treating fixed overhead as a period expense.