Which of the Following Audit Steps Would Be Most Effective

question 460

Multiple Choice

Which of the following audit steps would be most effective to review proper recording of and accountability over physical assets?

• A) Physically inspect all assets on the organization's property. II. Select a sample department and physically inspect assets in the department. III. Select a sample from the organization's records of physical assets and physically locate each asset. IV. Identify assets at a sample of locations and trace to the organization's records.
• B) I only
• C) I and IV only
• D) II and III only
• E) III and IV only

---

Definitions:

Annual Interest Tax Shield

The reduction in income taxes a company achieves through deductible interest expenses.

Coupon Rate

The annual interest rate paid by a bond, expressed as a percentage of the bond's face value.

Tax Rate

The percentage at which an individual or corporation is taxed, which can apply to income, capital gains, or property values.

Earnings Per Share

A measure of a company's profitability that calculates the portion of a company's profit allocated to each outstanding share of common stock.