When Audited Financial Statements Are Presented in a Document Containing

question 18

Multiple Choice

When audited financial statements are presented in a document containing other information, the auditors should

• A)perform inquiry and analytical procedures to ascertain whether the other information is reasonable.
• B)add an explanatory paragraph describing the other information to the auditors' report without modifying the opinion on the financial statements.
• C)perform the appropriate substantive procedures to corroborate the other information.
• D)read the other information to determine that it is consistent with the audited financial statements.

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Definitions:

Master Budget

The master budget is a comprehensive financial planning document that consolidates all of a company's individual budgets relating to sales, costs, operations, and capital.

Product

Any item or service offered to the market for consumption, use, or acquisition.

Merchandise Inventory

Goods that a company holds for the purpose of selling to customers in the ordinary course of business.

Monthly Depreciation

The portion of a fixed asset's cost allocated as an expense over a single month, reflecting the asset's decrease in value over time.