Which of the Following Scope Limitations Would Ordinarily Be of Most

question 19

Multiple Choice

Which of the following scope limitations would ordinarily be of most concern to the auditors?

• A)The inability to observe inventories because auditors were appointed following the date of the financial statements.
• B)Management's refusal to provide auditors with written representations.
• C)The inability to obtain confirmation of year-end balances from customers because of different billing dates.
• D)The use of the work of component auditors in the audit of group financial statements.

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Definitions:

Useful Life

The estimated period over which an asset is expected to be used before it is considered no longer useful by the owner.

Loss

The result of a company's expenditures surpassing its revenues, leading to financial detriment.

Fair Market Value

The price at which an asset would change hands between a willing buyer and seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

Commercial Substance

A transaction has commercial substance if it significantly changes the economic position or cash flows of the entity.