During the First Phase of an Audit, a CPA Most

question 12

Multiple Choice

During the first phase of an audit, a CPA most likely would:

• A)identify specific internal control activities that are likely to prevent fraud.
• B)evaluate the reasonableness of the company's accounting estimates.
• C)evaluate the integrity of management.
• D)inquire of the company's attorney as to whether any unrecorded claims are probable or asserted.

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Definitions:

Issuer

An entity that issues financial instruments, such as bonds, stocks, or other securities, to finance its operations.

Bond Indenture

A legal document outlining the terms and conditions between the bond issuer and the bondholders.

Market Rate

The prevailing rate at which goods, services, or securities are bought and sold in the market.

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.