Dual Purpose Tests Allow the Auditor to

question 74

Multiple Choice

Dual purpose tests allow the auditor to

• A)select one sample of balances and perform internal control and substantive tests of transactions on the sample
• B)select one sample of transactions and perform internal control and substantive tests of transactions on the sample
• C)select one sample of controls and perform internal control and substantive tests of transactions on the sample
• D)select one sample of controls and perform internal control and substantive tests of transactions on the controls

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Definitions:

Variable Manufacturing Cost

This is a subset of variable costs, referring specifically to costs that fluctuate with manufacturing output, such as raw materials and direct labor costs.

Fixed Manufacturing Cost

Costs that do not fluctuate with the volume of production, such as rent, salaries, and maintenance.

Incremental Analysis

Incremental Analysis is a decision-making tool used to compare the additional costs and benefits of one option over another, ignoring costs and benefits that are unchanged between options.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent and salaries.