Which of the Following Procedures Does Not Involve Tracing

question 12

Essay

Which of the following procedures does not involve tracing?
a.Selecting entries in the accounting records and inspecting the documentation that served as the basis for the entries.
b.Inspecting documents created when transactions were executed and determining whether that information was properly recorded in the accounting records.
c.Checking the original flow of the data through the accounting system.
d.Ensuring that data from source documents are included in the accounts.

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Definitions:

Administration Expenses

Expenses related to the general operation of a business, including executive salaries, HR, and IT, not directly tied to the production or selling of goods/services.

Operating Expense

Expenses that a business incurs through its normal business operations, often excluding the cost of goods sold, financing costs, and taxes.

Income Statement

A document presenting a business's income and outgoings within a set timeframe, leading to a declaration of either profit or loss.

Ending Capital

Beginning Capital + Additional Investments + Net Income – Withdrawals = Ending Capital. Or: Beginning Capital + Additional Investments – Net Loss – Withdrawals = Ending Capital.