An Entity's Income Statements Were Misstated Due to the Recording

question 11

Multiple Choice

An entity's income statements were misstated due to the recording of journal entries that involved debits and credits to an unusual combination of expense and revenue accounts. Auditors most likely could have detected this irregularity by

• A)tracing a sample of journal entries to the general ledger.
• B)evaluating the effectiveness of the internal control policies and procedures.
• C)investigating the reconciliations between controlling accounts and subsidiary records.
• D)performing analytical procedures designed to disclose differences from expectations.

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Definitions:

Tax Form

A document used to report income, calculate taxes to be paid to the federal or state government, and disclose other information as required by the tax authority.

Equity Accounts

Accounts that represent the owner's interest in the assets of a company after all liabilities have been deducted, essentially reflecting the net worth or ownership value in the company.

Search Engine Optimization

The practice of improving a website's presence in search engine results through various techniques and strategies.

Ranking Algorithms

Mathematical formulae or computations used to order or prioritize entities based on certain criteria, commonly utilized by search engines and social media platforms.