Which of the Following Is Not an Inherent Limitation of an Audit

question 7

Multiple Choice

Which of the following is not an inherent limitation of an audit?

• A)Audit testing of selective samples.
• B)Forming professional judgements in highly specialised areas.
• C)Time lapse between the balance date and the presentation of the audit report.
• D)All are inherent limitations.

Understand the role of intuition and systematic bias in human cognition and decision-making.

Appreciate the scientific method as a self-correcting process for understanding natural phenomena.

Describe how psychology aims to improve human well-being through various sub-fields like counseling, community psychology, and industrial-organizational psychology.

Recognize the misconceptions related to psychology and the impact of misinformation.

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Definitions:

Bad Debts Recovered

Previously written off debts that have unexpectedly been collected.

Allowance Method

An accounting technique used to estimate and account for bad debts, allowing companies to anticipate uncollectible accounts receivables.

Bad Debts Expense

An expense account reflecting the value of sales that were made on credit and are unlikely to be collected.

Income Statement Approach

A method to estimate bad debts expense by focusing on the income statement and adjusting the allowance for doubtful accounts to reach a desired net realizable value.