Which of the Following Statements on Professional Judgment Is Not

question 6

Multiple Choice

Which of the following statements on professional judgment is not true?

• A)The exercise of professional judgment requires the availability of benchmarks or explicit criteria by which to evaluate alternatives.
• B)The use of professional judgment represents arbitrary behaviour.
• C)An auditor must use his or her professional judgment to determine whether management's choices are suitable within the context of the company.
• D)Applying the mandatory disclosure requirements of the CICA Handbook often involves professional judgment.

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Definitions:

Job-Order Costing

A cost accounting system used to accumulate costs per job rather than per time period, appropriate for customized products or services.

Job-Order Costing

Job-order costing is an accounting method used to track costs and evaluate the profitability of custom jobs, focusing on specific, distinct jobs or batches.

Predetermined Overhead Rates

An estimate of indirect costs used to allocate overhead expenses to products or services based on a specific activity base, recalculated for clarity.

Underapplied Overhead

A situation where the allocated manufacturing overhead cost is less than the actual overhead incurred, leading to an adjustment in cost of goods sold and inventory.