The Tests of Details of Balances Procedure for Manufacturing Equipment

question 16

Multiple Choice

The tests of details of balances procedure for manufacturing equipment that requires the auditor to examine vendors' invoices of closely related accounts (such as repairs and maintenance) to uncover items that should be manufacturing equipment would satisfy the audit objective of

• A)detail tie-in.
• B)existence.
• C)classification.
• D)accuracy.

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Definitions:

Screening

The process of evaluating or examining something to ascertain its condition or identify the presence of something.

Signals

Actions or indicators that convey information or intentions in various contexts, such as economics, where they can indicate future behavior or trends.

Reputation

A long-term standing in the public regard that serves to reassure others that private information is not being concealed; a valuable asset in the face of adverse selection.

Diversification

The strategy of allocating investments or resources among various financial instruments, industries, or other categories to reduce risk.