The Audit Team Gathers Information About a New Client's Business

question 3

Multiple Choice

The audit team gathers information about a new client's business and industry in order to obtain:

• A)an understanding of the clients internal control system for financial reporting.
• B)an understanding of how economic events and transactions have an effect on the company's financial statements.
• C)information about control risk.
• D)information regarding whether the company is engaging in financial statement fraud.

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Definitions:

Retrieval

The act of retrieving and making conscious information that is kept in memory.

Serial Position Effect

The tendency to remember items at the beginning and end of a list better than those in the middle.

Retention

The ability to keep or hold information in memory over time.

Retrieval

The process of recalling information that has been previously learned or experienced from one's memory.