When the Auditor Is Performing Audit Data Analytics (ADA) as a Substantive

question 53

Multiple Choice

When the auditor is performing audit data analytics (ADA) as a substantive test of details of a population of transactions or balances, _______.

• A)the auditor will have evaluated inherent risk, and will likely have performed tests of controls to assess control risk
• B)the auditor will not have evaluated inherent risk, and will likely have performed tests of controls to assess control risk
• C)the auditor will have evaluated neither inherent risk, nor tests of controls to assess control risk
• D)the results should be immediately sent to management for vetting

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Definitions:

Consolidated Inventory

involves aggregating the inventories of a parent company and its subsidiaries, presenting them as a single inventory balance in the consolidated financial statements.

Outstanding Shares

The total number of shares of a corporation that are currently owned by all its shareholders, including shares held by institutional investors and restricted shares.

Straight-Line Method

A method of calculating depreciation of an asset by evenly distributing its cost over its useful life.

Shareholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing the ownership interest of shareholders.