Before Applying Substantive Procedures to the Details of Asset and Liability

question 24

Multiple Choice

Before applying substantive procedures to the details of asset and liability accounts at an interim date, the auditor should:

• A)consider the ability of the auditor to perform appropriate substantive procedures to cover the remaining period.
• B)investigate significant fluctuations that have occurred in the asset and liability accounts since the previous balance sheet date.
• C)select only those accounts which can effectively be sampled during year-end audit work.
• D)consider the compliance tests that must be applied at the balance sheet date to extend the audit conclusions reached at the interim date.

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Definitions:

Financial Expertise

Specialized knowledge and skills in finance, enabling an individual to make informed money management decisions.

Production Area

Part of a business where goods are manufactured or assembled.

Controllable Variance

The difference between the actual amount of variable factory overhead cost incurred and the amount of variable factory overhead budgeted for the standard product.

Factory Overhead

The indirect costs associated with manufacturing, such as utilities, maintenance, and salaries for management.