An Auditor Who Concludes That a Control Is Functioning Properly

question 133

Multiple Choice

An auditor who concludes that a control is functioning properly when,in fact,it is not has committed the

• A) Risk of underreliance.
• B) Risk of overreliance.
• C) Risk of incorrect acceptance.
• D) Risk of incorrect rejection.

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Definitions:

Manufacturing Overhead

All indirect costs associated with the production process, including but not limited to utilities, maintenance, and factory equipment depreciation.

Hourly Wages

Payment to workers based on the number of hours worked, typically associated with non-salaried employees.

Cost Of Goods Manufactured Statement

A financial document that calculates the total cost of goods produced within a specific period, including direct materials, direct labor, and overhead.

Income Statement

An accounting statement that details the performance of a firm (revenue minus expenses) for a specific period of time.