In Obtaining an Understanding of an Entity's Internal Control in a Financial

question 954

Multiple Choice

In obtaining an understanding of an entity's internal control in a financial statement audit, an auditor is not obligated to:

• A) Determine whether the control activities have been implemented.
• B) Perform procedures to understand the design of internal control.
• C) Document the understanding of the entity's internal control components.
• D) Search for significant deficiencies in the operation of internal control.

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Definitions:

Petty Cash Fund

A small amount of cash kept on hand for making immediate payments for minor expenses.

Auxiliary Petty Cash Record

A supplementary record for summarizing petty cash information.

First Aid Supplies

First aid supplies are materials and equipment used for providing initial care in case of illness or injury, commonly including bandages, antiseptics, and basic medical tools.

Salaries Expense

The total cost incurred by a company for paying its employees, typically recorded in the expense accounts in the general ledger.