When Labor Is a Material Factor in Inventory Valuation, the Auditor

question 38

Multiple Choice

When labor is a material factor in inventory valuation, the auditor should place special emphasis on testing the internal controls concerning:

• A) fictitious employees.
• B) authorization of wage rates.
• C) proper valuation and allocation of balances.
• D) completeness of recorded transactions.

---

Definitions:

Not-for-Profit Organizations

Entities that operate for purposes other than generating profit, focusing on social, educational, charitable, or other activities serving the public interest.

Budgeted Expenditures

Projected spending for a period, often categorized by expenses and investments, as part of a budget.

Budgeted Contributions

Projected or planned donations to be made or received by an organization within a specific time frame.

Direct Labor

The wages and other costs for labor that is directly involved in the manufacturing or production of goods and services.