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:

Employees' Lounge

A designated area within a workplace set aside for employees to relax, take breaks, and socialize, often equipped with amenities for comfort or entertainment.

HVAC System

A technology of indoor and vehicular environmental comfort that stands for Heating, Ventilation, and Air Conditioning, used to provide thermal comfort and acceptable indoor air quality.

Depletion Expense

A method of allocating the cost associated with the exhaustion of natural resources (like minerals, oil, and gas) over their productive life.

Development Costs

These are the expenses associated with the research and development of new products or services, often considered in the valuation of a company.