When the Auditors Obtain an Understanding of Internal Control for the Financing

question 5

Multiple Choice

When the auditors obtain an understanding of internal control for the financing cycle,documentation will frequently include a written description as well as a(n) :

• A)List of audit objectives.
• B)Decision table.
• C)Summary of tests of controls.
• D)Internal control questionnaire.

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Definitions:

Balance Sheet

A snapshot in financial reporting that captures a company's resources, owed amounts, and the value belonging to its shareholders at a distinct instant.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life evenly, resulting in a consistent expense charge over each period.

Double-Declining-Balance Depreciation

A method of accelerated depreciation in which an asset's book value is reduced at double the rate of its straight-line depreciation.

Retrospective Approach

The retrospective approach in accounting involves restating past financial statements as if a new accounting policy had been in effect in those periods, to provide consistency in financial reporting.