Which of the Following Procedures Would a CPA Most Likely

question 28

Multiple Choice

Which of the following procedures would a CPA most likely perform in the planning phase of a financial statement audit?

• A)Make inquiries of the client's lawyer concerning pending litigation.
• B)Perform cutoff tests of cash receipts and disbursements.
• C)Compare financial information with nonfinancial operating data.
• D)Recalculate the prior year's accruals and deferrals.

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Definitions:

Relevance

A fundamental quality of information that makes it useful for decision-making, ensuring that the information provided has the capacity to influence the decisions of its users.

Timely Basis

The practice of completing or delivering work within an agreed or expected period.

Price-Earnings Ratio

A valuation metric for stocks, calculated by dividing the market price per share by the earnings per share (EPS).

Investors' Expectations

The anticipations or beliefs that investors hold regarding future performance, earnings, and growth of a company or market.