For Which of the Following Audit Tests Would a CPA

question 394

Multiple Choice

For which of the following audit tests would a CPA most likely use attribute sampling?

• A) Identifying entries posted to incorrect accounts.
• B) Estimating the amount in an expense account.
• C) Evaluating the reasonableness of depreciation expense.
• D) Selecting receivables for confirmation of account balances.

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Definitions:

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.

Capital Stock

The original amount the owners paid into the company plus any additional paid-in capital to purchase stock in the company.

Long-Term Debt

An obligation for debt that is due to be repaid in more than 12 months.

5-Year Bank Loan

A financial agreement where a bank lends money to a borrower, to be repaid with interest over a five-year period.