Of the Following, Which Is an Important Procedure That an Auditor

question 15

Multiple Choice

Of the following, which is an important procedure that an auditor should use when making an overall review of the income statement?

• A)Obtain a schedule of the retained earnings activity for the period.
• B)Compare actual revenues and expenses with the corresponding figures of the previous year and investigate significant differences.
• C)Obtain, from the proper entity representative, inventory certificates for the beginning and ending inventory amounts that were used to determine cost of sales.
• D)Ascertain that the net income amount in the statement of cash flows agrees with the net income amount in the income statement.

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Definitions:

WAN

Wide Area Network (WAN) is a telecommunications network that extends over a large geographic area for the purpose of computer networking.

MAN

Metropolitan Area Network, a large computer network that spans a city or a large campus.

LAN

Local Area Network, a computer network that interconnects computers within a limited area such as a residence, school, or office building.

Bits Per Second

A measure of data transmission speeds in digital networks, quantifying how many bits are transmitted each second.