An Internal Auditor Would Most Likely Judge an Error in an Account

question 328

Multiple Choice

An internal auditor would most likely judge an error in an account balance to be material if the error involves:

• A) A data input function.
• B) A large percentage of net income.
• C) An unverified routine transaction.
• D) An unusual transaction for the company.

---

Definitions:

Trade or Business

This refers to the regular and continuous operation of an activity with the purpose of earning income or profit.

Depreciation

An accounting method of allocating the cost of a tangible or physical asset over its useful life to account for declines in value.

Ordinary Assets

Assets that are held for sale in the ordinary course of a business or are otherwise not capital assets, including inventory and property used in a trade or business.

Inventory

Goods and materials held by a business for the purpose of sale or production.