Which of the Following Auditing Procedures Most Likely Would Assist

question 845

Multiple Choice

Which of the following auditing procedures most likely would assist an auditor in identifying related party transactions?

• A) Retesting ineffective internal controls previously reported to those charged with governance.
• B) Sending second requests for unanswered positive confirmations of accounts receivable.
• C) Reviewing accounting records for nonrecurring transactions recognized near the balance sheet date.
• D) Inspecting communications with law firms for evidence of unreported contingent liabilities.

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Definitions:

Debit

An accounting entry that results in either an increase in assets or a decrease in liabilities or equity on a company’s balance sheet.

Asset Account

An account on a balance sheet that represents a resource owned or controlled by a company, expected to produce future economic benefits.

Acquisition Cost

The total expense incurred to obtain an asset, including the purchase price and all related costs to ready the asset for its intended use.

Installation Costs

Expenses incurred during the setup of equipment, machinery, or systems.