Which of the Following Audit Objectives Relates Primarily to the Financial

question 35

Multiple Choice

Which of the following audit objectives relates primarily to the financial report assertion of presentation and disclosure-classification and understandability?

• A)Inventories are included in the statement of financial position as current assets.
• B)Inventories exclude items billed to customers or owned by others.
• C)Inventories are included in the statement of financial position at the lower of cost and net realisable value.
• D)Inventory quantities include all products, materials and supplies owned by the company that are in transit.

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Definitions:

Machine-Hours

A measure of production output or activity based on the number of hours machinery is operated.

Job-Order Costing System

A methodology that assigns manufacturing costs to each individual product, allowing companies to track expenses for unique production orders.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products or job orders, based on a particular activity base such as labor hours or machine hours.

Machine-Hours

A measure of production time, calculated as the total hours that machines are operating in the manufacturing process.