Which of the Following Is the Least Important Audit Reason

question 37

Multiple Choice

Which of the following is the least important audit reason for the auditor's obtaining an understanding of a company's internal control?

• A)To serve as a basis for constructive suggestions.
• B)To plan subsequent substantive tests.
• C)To identify types of possible misstatements that may occur.
• D)To consider factors that may affect the risk of material misstatement.

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Definitions:

Cost of Goods

The total direct costs attributable to the production or purchase of goods sold by a company, including materials and labor.

Completed and Transferred

A term used in manufacturing to describe goods that have been finished and moved to the next stage of production or to inventory.

Cost of Production Report

A cost of production report summarizes the production and cost activity within a manufacturing department for a specific period, tracking the flow of units and the accumulated costs.

Conversion Costs

The costs incurred to convert raw materials into finished goods, typically including labor and overhead.