As a First Time Auditor of a Small Company,what Will

question 36

Multiple Choice

As a first time auditor of a small company,what will be your strategy to obtain an understanding of internal controls of the company?

• A)as the company is small,defer the procedure to understand internal controls until next year
• B)conduct the procedure of understanding internal controls in the current year
• C)rely on the verbal assurance from management that internal control exists
• D)get the company employees to test the internal controls for you

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Definitions:

Operating Cash Flow

A measure of the cash a company generates from its regular business operations, excluding financing and investment activities.

Calculating Project

The process of determining the expected financial outcomes or viability of a proposed project or investment.

Depreciation

A technique for distributing the expense of a physical asset throughout its period of usability.

Net Income

Net income is the total earnings of a company after all expenses and taxes have been deducted from revenue, indicating the company's profitability.