Essential to Both Management and Auditors Is a Chain of Evidence

question 46

Multiple Choice

Essential to both management and auditors is a chain of evidence in the accounting system provided by coding, cross references, and documentation connecting account balances and other summary results with original data. This chain of evidence is referred to as the:

• A) control trail.
• B) vouching or tracing trail.
• C) system reference trail.
• D) audit or transaction trail.
• E) accounting trail.

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Definitions:

Stock Issuance Costs

Expenses associated with the process of issuing new stocks in the market, such as legal fees, printing expenses, and commissions.

Financial Statements

Materials that present a snapshot of a business's financial health, detailing the balance sheet, income statement, and cash flow statement.

Common Voting Stock

Shares in a corporation that grant the holder the right to vote on corporate matters and potentially receive dividends.

Goodwill

An intangible asset that arises when a buyer acquires an existing business, representing the premium paid over the fair value of the net identifiable assets of the business.