Which of the Following Procedures Most Likely Would Provide an Auditor

question 19

Multiple Choice

Which of the following procedures most likely would provide an auditor with evidence about whether an entity's internal control is suitably designed to prevent or detect material misstatements?

• A)Scanning the journals produced by the internal control system.
• B)Performing analytical procedures using data aggregated at a high level.
• C)Vouching a sample of transactions directly related to the controls.
• D)Observing the entity's personnel applying the controls.

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Definitions:

Machine Hours

A metric used in manufacturing to allocate costs based on the number of hours a machine is operated.

Indirect Labor

Labor costs of employees who do not directly work on a product, but whose services are necessary for the manufacturing process.

Factory Utilities

Expenses incurred for the utilities used in the manufacturing plant, such as electricity, gas, and water.

Activity-Based Costing

Activity-based costing is a method of assigning indirect costs to products and services based on the activities they require, aiming for more accurate cost management.