In the Audit of Accounts Receivable,negative Confirmations Are Not Normally

question 37

Multiple Choice

In the audit of accounts receivable,negative confirmations are not normally used if ________.

• A)internal control is considered effective
• B)there are a large number of small balances
• C)customers can be expected to consider the confirmation properly
• D)account balances are in dispute

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Definitions:

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate estimated overhead costs to cost objects based on a chosen activity base.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the manufacturing process.

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, maintenance, and factory management salaries, excluding direct materials and direct labor costs.

Manufacturing Overhead Account

An account used to record indirect costs associated with production, such as utilities and maintenance, not directly tied to any specific product.