An Independent CPA Is Conducting an Audit of an Entity

question 60

Multiple Choice

An independent CPA is conducting an audit of an entity that receives federal financial assistance and is subject to the GAO standards (GAGAS) . The auditor must design the audit to provide reasonable assurance of detecting which of the following?

• A) Immaterial misstatements, if they result from illegal acts.
• B) Noncompliance with entity policies and procedures.
• C) Noncompliance with the terms of contracts or grant agreements.
• D) All of the above.

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Definitions:

Merchandise Inventory

Goods held by a company for the purpose of resale to customers in the regular course of business.

Beginning Inventory

The value of all the inventory held by a company at the start of an accounting period, used to calculate the cost of goods sold.

Net Purchases

The total amount of purchases made by a business after subtracting returns, allowances, and discounts.

Net Purchases

Net Purchases refers to the total amount of purchases made by a company after subtracting any returns, allowances, and discounts received.