When a Statement on Auditing Standards Uses the Word "Should

question 13

Multiple Choice

When a Statement on Auditing Standards uses the word "should" relating to a requirement,it means that the auditor:

• A)Must fulfill the responsibilities under all circumstances.
• B)Must comply with requirements unless the auditor demonstrates and documents that alternative actions are sufficient to achieve the objectives of the standards.
• C)Should consider whether to follow the advice based on the exercise of professional judgment in the circumstances.
• D)May choose to change responsibilities relating to various professional standards that remain under consideration.

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Definitions:

Adjusted Basis

The original cost of a property adjusted for factors such as depreciation or improvements, used to calculate capital gains or losses for tax purposes.

Recognized Gain

The profit earned from the sale of an asset that must be reported for tax purposes.

Adjusted Basis

The original cost of a property adjusted for improvements, depreciation, and certain other factors, used to calculate capital gains or losses.

Fair Market Value

The price that property would sell for on the open market, often used in the context of real estate and tax assessments.