Which of the Following Statements Is Correct Concerning the Auditor's

question 96

Multiple Choice

Which of the following statements is correct concerning the auditor's opinion on internal control effectiveness?

• A) The report describes any material weaknesses and discusses actions taken by management to remediate the problems.
• B) The report does not discuss whether the control weaknesses were first identified by management or the auditor.
• C) The report does not recognize the integrated nature of the audit and the affect of the material weakness on the planning of the financial statement audit.
• D) The report identifies management's actions to remedy the prior year's control weaknesses.

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Definitions:

Liquidity

The ability of an asset to be converted into cash quickly without significant loss of value, indicating a company's capacity to meet its short-term obligations.

Receivables Turnover Ratio

A measure of how efficiently a company collects cash from its credit sales, calculated by dividing net credit sales by average accounts receivable.

Statement of Financial Position

A financial report that details an organization's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.

Carrying Amount

Carrying Amount is the value at which an asset is recognized in the balance sheet after accounting for depreciation, amortization, or impairment losses.