Eva Islam, CPA Is Auditing a Company Where It Is

question 42

Multiple Choice

Eva Islam, CPA is auditing a company where it is experiencing strikes regularly, has been under investigation with non-compliance with legislation and is falling behind competitors.
What kind of risk is being assessed?

• A) fraud risk
• B) going concern risk
• C) both a and b
• D) none of the above

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Definitions:

Equivalent Units

A concept used in cost accounting to convert partially completed units of production into a number of fully completed equivalent units.

Process Costing System

A process costing system is an accounting method used to allocate costs to units of product in continuous or repetitive processes, suitable for industries producing homogeneous products.

Conversion Costs

Conversion costs are manufacturing expenses incurred in converting raw materials into finished products, including direct labor and manufacturing overhead.

First-In, First-Out

An inventory valuation method where the oldest inventory items are recorded as sold first.