The Documentation of an Auditor's Understanding of Internal Controls

question 70

Multiple Choice

The documentation of an auditor's understanding of internal controls:

• A)is optional.
• B)must be exclusively in narrative, questionnaires, or flowchart form.
• C)must include flowcharts.
• D)can include any combination of narratives, questionnaires, or flowcharts.

---

Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, represented as an expense in the income statement.

Discount Period

A designated time frame during which a discount is applicable on a payment or transaction.

Adjusting Entry

A journal entry made at the end of an accounting period to record any unrecorded income or expenses for that period.

Interest Payable

A liability account showing the amount of interest expense that has accrued but not yet been paid to creditors.