Which of the Following Procedures Would an Auditor Most Likely

question 184

Multiple Choice

Which of the following procedures would an auditor most likely include in the initial planning of a financial statement audit?

• A) Obtaining a written representation letter from the client's management.
• B) Examining documents to detect illegal acts having a material effect on the financial statements.
• C) Considering whether the client's accounting estimates are reasonable in the circumstances.
• D) Determining the extent of involvement of the client's internal auditors.

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Definitions:

Passive Activities

Economic activities or investments in which the investor does not materially participate, often subject to different tax rules.

Schedule A

A form used in the U.S. tax system for itemizing deductions, including medical expenses, taxes paid, and charitable contributions.

Schedule C

A tax form used by sole proprietors in the United States to report the income and expenses of their business, used to calculate net business profit or loss.

Primarily Rental

Describes a property used mainly for rental purposes, affecting its tax treatment and eligible deductions.