Martin Bellefeuille Was Asked by His Audit Manager to Perform

question 49

Multiple Choice

Martin Bellefeuille was asked by his audit manager to perform an evaluation of the operating effectiveness of controls in preventing material misstatements at the assertion level. In complying with the request, what did he do?

• A) He evaluated control risk.
• B) He determined audit risk.
• C) He determined inherent risk.
• D) None of the above.

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Definitions:

Method

A systematic way of doing things or a procedure. This definition is broadly applicable across different contexts including sciences, arts, and business operations.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs and treats fixed manufacturing overhead as a period expense.

Production Levels

Production levels pertain to the quantity of goods or services produced over a specified period, directly influencing a company's inventory and supply chain.

Product Costs

Costs that are directly associated with the production of goods, including direct labor, direct materials, and manufacturing overhead.