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:

Dividend

A portion of a company's earnings distributed to shareholders, usually in the form of cash payments or additional shares.

Net Income

The total earnings or profit of a company after accounting for all expenses and taxes; represents the company's bottom line.

Year-End Equity

refers to the total value of an owner's interest in a company at the end of a financial year, calculated as assets minus liabilities.

Total Assets

The sum of all resources owned by a company, valued in terms of monetary units, which includes both current and non-current assets.