Which of the Following Audit Procedures Would Be the Most

question 90

Multiple Choice

Which of the following audit procedures would be the most effective in testing for nonexistent employees?

• A) Trace transactions recorded in the payroll journal to the HR department to determine employment status.
• B) Examine cancelled checks for proper endorsement.
• C) Recalculate net pay .
• D) Reconcile the disbursements in the payroll journal with the disbursements on the payroll bank statements.

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Definitions:

Manufacturing Overhead

All indirect costs associated with the manufacturing process, including depreciation, utilities, and salaries for supervisors.

Gross Margin

The difference between sales revenue and the cost of goods sold, indicating the profitability of a company's core activities excluding overhead.

Contribution Margin

The amount of revenue remaining after variable costs have been deducted, which contributes to covering fixed costs and generating profit.

Opportunity Cost

The expense associated with missing out on the second-best option when a choice is made.