The Decision on the Part of the Auditor to Perform

question 64

Multiple Choice

The decision on the part of the auditor to perform substantive tests during the interim period will be based upon:

• A) staffing considerations.
• B) the cooperation of client personnel, especially internal auditors.
• C) audit risk control and cost effectiveness.
• D) the approach followed in the past.
• E) his or her own availability.

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Definitions:

Equity and Debt

The two main types of financing for companies: equity represents ownership (stocks), and debt represents borrowed funds (bonds or loans) that must be repaid.

Tax Deductible

Costs that can be deducted from total income to lower the taxable income amount.

Return to Equity

The amount of net income returned as a percentage of shareholders equity.

Operating Income

Income generated from regular business operations, excluding expenses such as taxes and interest payments.