If an Auditor Has Determined That Inherent Risk for Accounts

question 54

Multiple Choice

If an auditor has determined that inherent risk for accounts receivable is high and wishes to verify the balance as accurate, the best corroborating evidence would be ________.

• A)a phone call to the client
• B)a negative confirmation sent to the entity in question
• C)a positive confirmation sent to the entity in question
• D)inspection of supporting documents relating to the receivables transactions

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Definitions:

Beginning Inventory

The value of goods available for sale at the start of an accounting period, carried over from the end of the previous period.

Cost of Goods Sold

This term refers to the direct costs attributable to the production of the goods sold by a company, including the cost of materials and labor.

Perpetual Inventory

An inventory management system where updates are made continuously to record sales and purchases, providing a real-time view of inventory levels.

Purchase Price

The amount of money paid or agreed to be paid by the buyer to acquire an asset, product, or service from a seller.