"The Auditor Should Not Assume That Management Is Dishonest, but the Possibility

question 38

Multiple Choice

"The auditor should not assume that management is dishonest, but the possibility of dishonesty must be considered." This is an example of:

• A)unprofessional behavior.
• B)an attitude of professional skepticism.
• C)due diligence.
• D)a rule in the AICPA's Code of Professional Conduct.

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Definitions:

Inventory

The raw materials, work-in-progress products, and finished goods that a company holds for the purpose of sale in the near future.

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary based on income level, type of income, or legal jurisdiction.

Noncontrolling Interest

A minority ownership in a subsidiary, where the parent company owns the majority but not all of the subsidiary's shares.

Treasury Stock Approach

A method of accounting for repurchased shares of stock by reducing the total available shares in the market, often affecting the calculation of earnings per share and other metrics.