When a Sample of Sales Transactions Recorded in the Sales

question 29

Multiple Choice

When a sample of sales transactions recorded in the sales journal is traced back to the customer orders and shipping documents, the auditor is testing the ____________ assertion.

• A) Cutoff
• B) Authorization
• C) Completeness
• D) Occurrence

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Definitions:

Direct Labour

The labor costs directly associated with the manufacture of specific goods or services.

Variable Manufacturing Overhead

Indirect, fluctuating costs involved in the production process, such as utilities and maintenance, that are not directly tied to specific units produced.

Fixed Manufacturing Overhead

Costs related to manufacturing that do not vary with the level of production, such as factory rent, salaries of permanent staff, and depreciation of factory equipment.

Fixed Expenses

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums.