Which of the Following Statements Concerning Audit Evidence Is Correct

question 86

Multiple Choice

Which of the following statements concerning audit evidence is correct?

• A)Appropriate evidence supporting management's assertions should be convincing rather than persuasive.
• B)Effective internal controls contribute little to the reliability of the evidence created within the entity.
• C)The cost of obtaining evidence is not an important consideration to an auditor in deciding what evidence should be obtained.
• D)A company's accounting data cannot be considered sufficient audit evidence to support the financial statements.

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Definitions:

Variable Factory Overhead

Costs that vary with the level of production, such as supplies and energy for machinery.

Factory Overhead

All indirect costs associated with manufacturing, excluding direct materials and direct labor. Also known as manufacturing overhead, this includes costs such as utilities, depreciation, and maintenance of equipment.

Direct Labor

Labor costs directly attributable to the production of goods, including wages paid to workers who are actively involved in the manufacturing process.

Direct Material

Raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the production cost.