When Auditing Accrued Property Taxes

question 2

Multiple Choice

When auditing accrued property taxes:

• A)the source for the debits to the liability account is the acquisitions journal.
• B)realizable value is an important balance-related audit objective.
• C)the ending balance in the account should be confirmed with the applicable taxing authority.
• D)the most important consideration for the auditor is that the same portion of each tax payment for the accrual that was used in the preceeding year is used in the current year.

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Definitions:

Partnership Law

The legal framework that governs the creation, operation, and dissolution of a business partnership, including the rights and responsibilities of the partners.

Agency Relationship

The association between one party and an agent who acts on behalf of that party.

Binding Obligations

Duties or agreements that are legally enforceable, requiring parties to fulfill their contractual commitments.

Unlimited Personal Liability

A legal obligation that holds an individual personally responsible for all debts and obligations of a business, without any limit on the amount that can be claimed.