An Auditor's Tests of Controls Over the Issuance of Raw

question 21

Multiple Choice

An auditor's tests of controls over the issuance of raw materials to production would most likely include

• A)reconciling raw materials and work-in-process perpetual inventory records to general ledger balances.
• B)inquiring of the custodian about the procedures followed when defective materials are received from vendors.
• C)observing that raw materials are stored in secure areas and that storeroom security is supervised by a responsible individual.
• D)examining material requisitions and reperforming client controls designed to process and record issuances.

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Definitions:

Substitute Resources

Alternative means or materials that can be used to achieve the same function or production goal in the absence of preferred resources.

Price of Capital

The cost of using capital assets for production, including interest rates on loans or opportunity costs of using own capital.

Wage Rate

The amount of money paid to an employee by an employer in exchange for work performed, typically expressed on an hourly, daily, or piecework basis.

Workers Hired

The process of employing individuals to perform tasks or services in exchange for compensation.