In Regard to Identifying and Evaluating Subsequent Events, ASA560

question 35

Multiple Choice

In regard to identifying and evaluating subsequent events, ASA560.10 (ISA 560) specifies that the auditor make inquiries of management. Which of the following is not an example of a specific inquiry?

• A) whether new commitments, borrowings or guarantees have been entered into.
• B) whether sales of assets have occurred or are planned.
• C) whether any unusual accounting adjustments are being contemplated.
• D) the current status of items previously accounted for on the basis of preliminary or inconclusive data.

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Definitions:

Perpetual Inventory System

A procedural method in inventory accounting that directly records every inventory sale or purchase with the aid of computerized point-of-sale systems and enterprise asset management software.

Sales Tax

A tax on sales or on the receipts from sales.

Credit Memo

A document issued by a seller to a buyer, reducing the amount owed, often due to a return or overcharge.

Perpetual Inventory System

In accounting for inventory, this method promptly captures the transaction of a sale or purchase using advanced computerized point-of-sale systems and enterprise asset management software.