In an Effort to Satisfy the Completeness Objective, the Auditor

question 104

Multiple Choice

In an effort to satisfy the completeness objective, the auditor could perform which of the following test of details of balance procedures?

• A) Trace the book balance on the reconciliation to the general ledger.
• B) Trace outstanding checks to subsequent period bank statements.
• C) Perform a four-column proof of cash.
• D) Review financial statements to make sure that material savings accounts and certificates of deposit are disclosed separately.

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Definitions:

Merchandise

Goods that are purchased for the purpose of being sold to customers in the retail environment.

Warranty Expense

A cost incurred by a company to repair or replace products during a specified period under warranty coverage.

Warranty Service

A promise from the seller or manufacturer to repair or replace defective products within a specified time period at no additional cost to the buyer.

Estimated Warranty Expense

An accounting provision representing the anticipated cost of honoring product warranties, calculated based on historical warranty data and sales forecasts.