Harvey, CPA, Is Preparing an Audit Program for the Purpose

question 5

Multiple Choice

Harvey, CPA, is preparing an audit program for the purpose of ascertaining the occurrence of subsequent events that may require adjustment or disclosure essential to a fair presentation of the financial statements in conformity with applicable accounting standards.Which one of the following procedures would be LEAST appropriate for this purpose?

• A) Confirm, as of the completion of fieldwork, accounts receivable that have increased significantly from the year-end date.
• B) Inquire of management concerning events that may have occurred.
• C) Read the minutes of the board of directors meetings.
• D) Obtain a legal counsel's letter as of the completion of fieldwork.

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Definitions:

Machine-Hours

A measure of production time, describing how many hours a machine is in operation.

Job-Order Costing

A cost accounting system that accumulates costs per job rather than by process, suitable for firms producing unique products or jobs.

Plantwide Predetermined

A single predetermined overhead rate that is applied throughout an entire plant or manufacturing facility.

Machine-Hours

A measure of the amount of time that a machine is operated, used as a basis for allocating manufacturing overhead costs in traditional costing systems.