Generally Accepted Auditing Standards Recognize Two Categories of Evidential Matter

question 42

Multiple Choice

Generally accepted auditing standards recognize two categories of evidential matter: underlying accounting data and corroborating information. In making an audit in accordance with GAAS:

• A) corroborating information is always required, while underlying accounting data may be gathered under certain circumstances.
• B) underlying accounting data must always be gathered, while corroborating information need only be obtained when the accounting records are not reliable.
• C) both categories are required.
• D) the auditor may choose the category to use, and omit the other.
• E) neither category is required.

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Definitions:

Planning Budget

A budget prepared for a specific level of activity that may be adjusted for various activity levels.

Vocational School

An educational institution that provides practical and skills-based training aimed at preparing students for specific trades, professions, or careers.

Budgets

Financial plans that estimate revenue and expenditures over a specific period, helping organizations plan their finances.

Standard Costs

Predetermined costs for materials, labor, and overhead used for budgeting and assessing performance.