A Major Consideration in Verifying the Ending Balance in Fixed

question 123

Multiple Choice

A major consideration in verifying the ending balance in fixed assets is the possibility of existing legal encumbrances. Tests to identify possible legal encumbrances would satisfy the audit objective of

• A) existence.
• B) presentation and disclosure.
• C) detail tie-in.
• D) classification.

Apply FIFO costing principles to a variety of manufacturing scenarios to determine costs associated with production.

Understand the FIFO method in process costing systems.

Analyze how beginning and ending work in process inventories affect equivalent unit calculations.

Determine the cost of units transferred out of a department.

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Definitions:

Market System

(1) An economic system in which individuals own most economic resources and in which markets and prices serve as the dominant coordinating mechanism used to allocate those resources; capitalism. Compare with command system. (2) All the product and resource markets of a market economy and the relationships among them.

Incentives

Rewards or penalties designed to influence the actions or behaviors of individuals or entities in desired ways.

Internal Efficiency

The effective allocation and use of resources within an organization or system, leading to the achievement of its objectives without waste.

Public Sector

The segment of the economy comprised of government services and enterprises, funded and operated by the government, serving the public interest.