From Which One of the Following Evidence- Gathering Audit Procedures

question 78

Multiple Choice

From which one of the following evidence- gathering audit procedures would an auditor obtain most assurance concerning the existence of inventories?

• A) Confirmation of inventories in a public warehouse
• B) Written inventory representations from management
• C) Auditor's recomputation of inventory extensions
• D) Observation of physical inventory counts

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Definitions:

Income Statement

A financial statement that shows a company's revenues and expenses, leading to the total profit or loss over a specific period.

Par Stock

The ideal stock level that a business aims to maintain to fulfill customer orders without overstocking.

Stock Split

A reduction in the par or stated value of a common stock and the issuance of a proportionate number of additional shares.

Appropriation of Retained Earnings

The process of allocating retained earnings to specific purposes, such as reserves or dividend distribution.