The Auditor Should Obtain Sufficient Knowledge of the Client's Information

question 332

Multiple Choice

The auditor should obtain sufficient knowledge of the client's information and communication system relevant to financial reporting to understand all of the following, except

• A) Classes of transactions in the entity's operations that are significant to the financial statements, and how those transactions are processed, from initiation to inclusion in the financial statements.
• B) The financial reporting process, including development of significant accounting estimates and inclusion of appropriate disclosures.
• C) The means the entity uses to communicate roles, responsibilities, and significant matters relating to financial reporting.
• D) Control activities related to each account balance, transaction class, and disclosure component in the financial statements or to every assertion relevant to them.

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Definitions:

Income Elasticity

A measure of how much the demand for a good or service changes with a change in the consumer's income.

Per Capita

A statistical measure that represents the average per person of a particular indicator, such as income or GDP.

Disposable Income

The sum of funds households can allocate for expenditure and saving once income taxes are deducted.

Barbara Streisand CDs

Compact discs containing music recorded by Barbara Streisand, an American singer, actress, and filmmaker.