The Client May Use a Variety of Methods to Understate

question 98

Multiple Choice

The client may use a variety of methods to understate expenses and payables.These include

• A)failure to record accounts payable at the end of the year
• B)failure to review payroll expense or fringe benefits at year end
• C)failure to review accrued expenses at year end
• D)capitalization of expenses
• E)failure to review long term liabilities
• F)both A and D
• G)both B and D

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Definitions:

Conversion Costs

All manufacturing costs other than direct material costs.

Absorption Costing

A method of inventory costing that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Direct Materials Costs

Costs directly traceable to the production of a product, including raw materials and component parts.