What Is the Strongest Form of Audit Evidence

question 14

Multiple Choice

What is the strongest form of audit evidence?

• A) The auditor's direct personal knowledge.
• B) Evidence gathered directly from independent third parties.
• C) Evidence produced by independent third parties.
• D) Comprehensive analysis performed by the auditor.

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Definitions:

Opening Inventory

The quantity and value of stock available at the start of an accounting period.

Absorption Costing

A method of accounting that encompasses the total manufacturing expenses – encompassing direct materials, direct labor, as well as both variable and fixed overhead costs – within the product's cost.

Variable Costing

An accounting method that only considers variable costs in product pricing and decision making.

Fixed Overhead Expensed

The practice of charging fixed overhead costs to the income statement in the period they are incurred, rather than allocating them to products.