As Part of Gaining an Initial Understanding of Internal Control,an

question 86

Multiple Choice

As part of gaining an initial understanding of internal control,an auditor is required to do all of the following except:

• A) Consider factors that affect the risk of material misstatement.
• B) Ascertain whether internal control policies and procedures have been placed in operation.
• C) Identify the types of potential misstatements that can occur.
• D) Obtain knowledge about the operating effectiveness of the internal control.

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Definitions:

Weighted-Average Method

This is a cost accounting method that calculates inventory cost by taking the weighted average of all units available for sale during the accounting period.

Work in Process Inventory

The value of goods in various stages of production but not yet completed; includes materials, labor, and overhead costs incurred so far.

Process Costing

An accounting methodology used for homogeneous products, allocating manufacturing costs to units of output on an average basis.

Process Costing

A costing method used in manufacturing where costs are assigned to batches or production runs, typically suitable for homogeneous products.