In Regard to Identifying and Evaluating Subsequent Events, AU 560

question 15

Multiple Choice

In regard to identifying and evaluating subsequent events, AU 560.12 specifies that the auditor inquires of management having responsibility for financial and accounting matters as to all of the following except:

• A) any substantial contingent liabilities or commitments existing at the balance sheet date or date of inquiry.
• B) any significant changes in capital stock, long-term debt, or working capital to the date of inquiry.
• C) the minutes of meetings of directors, stockholders, and other appropriate committees.
• D) the current status of items previously accounted for on the basis of tentative, preliminary, or inconclusive data.
• E) whether any unusual adjustments have been made since the balance sheet date.

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or other activity levels, allowing more accurate comparisons to actual spending.

Budget Coordination

The process of ensuring all parts of an organization's budget align with its strategic and operational goals.

Large Company

A corporation that typically has a high level of capitalization, extensive operations, a large number of employees, and generates a significant amount of revenue.

Sales Forecast

An estimate of the quantity of goods or services that will be sold in a future period.