In Evaluating the Reasonableness of an Accounting Estimate, an Auditor

question 85

Multiple Choice

In evaluating the reasonableness of an accounting estimate, an auditor would be least likely to use which of the following approaches?

• A) Review subsequent events or transactions occurring prior to audit completion.
• B) Develop an independent expectation of the estimate.
• C) Review and test the process used to develop the estimate.
• D) Review the minutes of board of directors and shareholder meetings for discussion of the estimate.

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Definitions:

Normal Model

A distribution of probability that exhibits symmetry around the mean, demonstrating that data points close to the mean occur more frequently than those far from it.

Volumes

Quantities of three-dimensional space enclosed within a boundary or the contents within a container, measured in cubic units.

Normal Model

A symmetric probability distribution around the mean, indicating that occurrences of data are more common close to the mean than far from it.

Snowfall

The precipitation of flakes of crystalline water ice from clouds.