Calculating the Turnover of Receivables Is Often Used in Testing

question 102

Multiple Choice

Calculating the turnover of receivables is often used in testing the sales cycle by auditors when performing

• A)trend analysis.
• B)ratio analysis.
• C)reasonableness testing.
• D)non-statistical sampling.

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Definitions:

Fixed Manufacturing Overhead

Costs that remain constant regardless of the level of production or sales volume, such as salaries of supervisors and rent for factory premises.

Fixed Manufacturing Overhead

Indirect manufacturing costs that remain relatively constant regardless of the volume of production, including costs like factory rent, salaries of supervisors, and depreciation of factory equipment.

Direct Labor

The cost of wages for labor directly involved in the production of goods or services.

Raw Material

Basic materials and substances used in the initial stages of production to create goods and services.