Evidence Can Be Obtained from Others or Provided by the Auditor

question 61

Multiple Choice

Evidence can be obtained from others or provided by the auditor who has good knowledge of each industry but is not an expert.Which of the following types of evidence is considered to be most reliable?

• A)examination of diamond inventory by the auditor
• B)external confirmations from individual owners of condominium units
• C)examination of oil and gas reserves by the auditor
• D)external confirmations from financial institutions

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Definitions:

Required Rate

The minimum return that investors expect to earn from an investment, determining the value of an investment.

Variable Cost

Costs that vary directly with the level of production or output, such as raw materials and labor expenses, adjusting as the volume of production increases or decreases.

Credit Policy

Guidelines that a company follows to determine the creditworthiness of customers and the terms and conditions for extending credit.

Incremental Cash Flow

The extra money a company gains by embarking on a project or investment.