The Audit Procedures for the Subsequent Events Review Can Be

question 100

Multiple Choice

The audit procedures for the subsequent events review can be divided into two categories: ? (1) procedures normally integrated as a part of the verification of year-end account balances,and (2) those performed specifically for the purpose of discovering subsequent events.Which of the following procedures is in the second category?

• A)Correspond with attorneys.
• B)Test the collectability of accounts receivable by reviewing subsequent period cash receipts.
• C)Subsequent period sales and purchases transactions are examined to determine whether the cutoff is accurate.
• D)Compare the subsequent-period purchase price of inventory with the recorded cost as a test of lower of cost or market valuation.

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Definitions:

Journal Entries

The method by which transactions are entered into an entity's accounting records, showing the financial effects of transactions in a double-entry bookkeeping system.

Adjusted Trial Balance

An inventory of every account, including updated balances following the posting of adjusting entries, that serves as the basis for generating financial statements.

Trial Balance

A bookkeeping report that lists all the balances in each account ledger in two columns, debits and credits, ensuring that total debits equal total credits.

Adjusting Entries

Entries made in accounting books at the end of the cycle to rightly allocate the period's earnings and financial outgoings.