The Least Likely Procedure to Obtain an Understanding of Internal

question 83

Multiple Choice

The least likely procedure to obtain an understanding of internal controls would be:

• A) reviewing previous experience with the client.
• B) inspecting documents and records.
• C) confirming transactions.
• D) inquiring of appropriate management.
• E) observing entity operations.

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Definitions:

Intraperiod Tax Allocation

The allocation of tax expense or benefit among different components of comprehensive income, such as operating income and other comprehensive income.

Deferred Tax Assets

Financial assets that result from differences between the tax base of assets or liabilities and their carrying amount in financial statements, which will result in deductible amounts in future periods.

Deferred Tax Liabilities

A tax obligation recorded on a company's balance sheet that results from temporary differences between the tax basis of assets or liabilities and their reported amount in the financial statements.

Deferred Tax Assets

Financial items on a company's balance sheet that reduce future tax liability due to temporary differences between the accounting and tax treatment of assets and liabilities.