The Most Significant Audit Issue That Came as a Result

question 6

Multiple Choice

The most significant audit issue that came as a result of the court decision in the Escott et al. v. BarChris Construction Corporation case in 1968 was

• A) the court's reaffirmation that the burden of proof was on the plaintiff to prove the auditor was negligent.
• B) the affirmation of an increase in the auditor's responsibility when performing a review of events subsequent to the balance sheet date (S-1 review) for registration statements.
• C) the increased auditor responsibility when associated with unaudited financial statements.
• D) the court's refusal to allow the percentage-of-completion method of accounting for revenues.

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Definitions:

Total Revenue

The total amount of money generated from the sale of goods or services by a company before any expenses are deducted.

Total Revenue

The total amount of money received by a company from sales of goods or services before any expenses are subtracted.

Price Elasticity

A measure of how much the quantity demanded or supplied of a good changes in response to a change in its price.

Tea Sales

This refers to the commercial activity of buying and selling tea in various forms and quantities.