Once the Auditor Has Determined the Company's Policy for Accruing

question 29

Multiple Choice

Once the auditor has determined the company's policy for accruing wages and knows it is consistent with that of previous years, the appropriate audit procedure to test for cutoff and accuracy is to:

• A) compare the recorded accrued wages with the amount approved in the minutes of the board.
• B) confirm the amount with employees.
• C) recalculate the client's accruals.
• D) compare the ledger balance with the journal and the tax form.

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Definitions:

Net Defined Benefit Liability

The difference between the total amount of pension benefits promised to employees and the actual funds set aside in the pension fund to meet those liabilities.

Termination Benefits

Payments or other benefits provided to employees as compensation for their dismissal or for voluntary separation under conditions specified by the employer.

Withdraw The Offer

The act of revoking or cancelling a proposal or bid that had previously been made.

Present Obligation

A current duty or responsibility that an entity has as a result of past events, which will likely require an outflow of resources.