One of the Changes in Auditing Procedure Which Was Brought

question 10

Multiple Choice

One of the changes in auditing procedure which was brought about as a result of the 1136 Tenants case was that auditors were encouraged to begin using:

• A)letters of representation.
• B)confirmation letters.
• C)engagement letters.
• D)billet doux letters.

---

Definitions:

Average Collection Period

The average number of days it takes for a company to collect payments from its customers, a measure of the efficiency of its credit policies.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets.

Quick Ratio

A measure of a company's short-term liquidity, calculated as (Current Assets - Inventory) / Current Liabilities, indicating how well a company can meet its short-term financial liabilities.

Days' Sales in Inventory

A financial metric that estimates how long it takes for a company to turn its inventory into sales.