Which Audit Procedure Would Be Used to Test for the Existence

question 80

Multiple Choice

Which audit procedure would be used to test for the existence balance-related audit objective?

• A) Trace ten accounts from the aged trial balance to the accounts receivable master file.
• B) Confirm accounts receivable.
• C) Review large sales returns and allowances before and after the balance sheet date.
• D) Trace ten accounts from the trial balance to the accounts on the master file.

Apply the cost recovery method for recognizing revenue when there is uncertainty regarding collectibility.

Understand how to recognize revenue from software sales, including cases with and without significant production, modification, or customization.

Know the differences in revenue recognition methods (percentage of completion, cost recovery, and completed contract) and their application under GAAP and IFRS.

Calculate revenue recognition for contracts permitting multiple service uses based on usage and associated costs.

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Definitions:

Top Management

The highest level of executives and senior administrators responsible for steering the overall direction of a company or organization.

Commitment

The state of being emotionally or intellectually devoted to a cause, activity, or relationship.

Team Building

Team building involves a variety of activities undertaken to enhance social relations and define roles within teams, often involving collaborative tasks to improve team performance and interpersonal relationships.

Informal Basis

Refers to actions or structures not formally established but operating through unwritten rules or common practices.