Once the Auditor Determines That the Company's Policy for Accruing

question 32

Multiple Choice

Once the auditor determines that the company's policy for accruing wages is consistent with prior years, the appropriate audit procedure to test for accuracy and cutoff is

• A) recalculating the client's accrual.
• B) performing extensive tests of controls.
• C) performing extensive tests of details.
• D) none of the above.

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Definitions:

Tax Exempt Equivalent Yield

A calculation that determines the return needed on a taxable bond to make it equivalent to the yield on a tax-exempt bond, factoring in the investor's tax rate.

Marginal Tax Rate

The amount of tax paid on an additional dollar of income.

Bond Yield

The return an investor realizes on a bond, calculated by dividing the annual interest payments by the current market price of the bond.

Equally Weighted Index

An equally weighted index is a stock market index in which each constituent stock contributes equally to the index's value, regardless of the company's market capitalization.