Which of the Following Is Not a Substantive Audit Procedure

question 21

Multiple Choice

Which of the following is not a substantive audit procedure for leases?

• A)Obtain and read copies of lease agreements and develop a schedule of leases.
• B)Review relevant expense accounts and determine if there are entries related to leases.
• C)For all operating leases,determine that the client has recorded assets and lease obligations properly.
• D)Review the client's disclosure of lease obligations for compliance with GAAP.

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Definitions:

Variable Costing

A costing method that includes only variable manufacturing costs — direct materials, direct labor, and variable manufacturing overhead — in the cost of a product.

Unit Product Cost

The total cost incurred to produce, package, and place a product ready for sale, divided by the number of units produced.

Absorption Costing

An accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed overhead—in the cost of a product.

Unit Product Cost

The calculation of the total cost (including materials, labor, and overhead) to produce a single unit of a product.