With Respect to the Auditor's Planning of a Year-End Audit

question 42

Multiple Choice

With respect to the auditor's planning of a year-end audit, which of the following statements is always true?

• A) An engagement should not be accepted after the fiscal year-end.
• B) An inventory count must be observed at the balance sheet date.
• C) The client's audit committee should not be told of any specific audit procedures which will be performed.
• D) It is an acceptable practice to carry out parts of the examination at interim dates.

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Definitions:

Direct Labor

The cost of workers who are directly involved in the production of goods or the delivery of services.

Standard Cost System

An accounting method that assigns predetermined costs to products and services, which are then compared to actual costs to measure performance.

Labor Rate Variance

The difference between the actual cost of labor and the budgeted or standard cost of labor, used as a measure of performance in cost control.

Average Cost

A financial metric calculated by dividing the total cost of goods available for sale by the total number of items available for sale, used to determine the profitability of sales.