Which of the Following Underlies the Application of Generally Accepted

question 21

Multiple Choice

Which of the following underlies the application of generally accepted auditing standards?

• A) the elements of materiality and relative risk
• B) the element of internal control
• C) the element of corroborating evidence
• D) the element of reasonable assurance

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Definitions:

Indirect Materials

Materials used in the production process that do not directly become part of the finished product.

Manufacturing

The procedure of changing basic materials, components, or elements into end products that align with a customer’s needs or criteria.

Direct Materials

Raw materials that can be directly traced to the manufacturing process of a product and are a significant part of its cost.

Secondary Materials

Materials used in the production process that are not the primary raw materials.