Within the Scope Paragraph of the Audit Report, the Auditor

question 47

Multiple Choice

Within the Scope paragraph of the audit report, the auditor provides __________ that the financial statements are free from material misstatements.

• A) Reasonable assurance.
• B) Guaranteed assurance.
• C) Auditing assurance.
• D) Unqualified assurance.

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Definitions:

Direct Material

Primary raw materials that can be specifically identified and directly charged to the manufacturing of a specific product.

Standard Quantity

This is the predetermined amount of materials or labor expected to be used in producing a unit of product or service.

Direct Material Price Variance

The difference between the actual cost of direct materials used and the expected (or standard) cost, which can indicate efficiency in purchasing materials.

Standard Costing

A cost accounting method that uses standard costs for direct materials, labor, and overhead to help managers control costs by comparing expected costs to actual costs.