If the Auditor Obtains Sufficient Competent Evidence on the Client's

question 65

Multiple Choice

If the auditor obtains sufficient competent evidence on the client's accounts receivable balance by alternative procedures because it is impractical to confirm accounts receivable,the auditor's opinion should be unqualified and could be expected to

• A)disclose the fact that alternative procedures were used due to client-imposed scope limitation.
• B)disclose in the opinion paragraph that confirmation of accounts receivable was impracticable.
• C)avoid mentioning the alternative procedures.
• D)include an explanatory paragraph that discloses the performance of alternative procedures.

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Definitions:

Variable Costs

Costs that vary in direct proportion to changes in levels of an activity or production volume.

Fixed Costs

These are expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Net Income

The total earnings of a company after subtracting all of its expenses, including taxes and operating expenses, from its total revenues.

Required Sales

Required sales refer to the sales volume or revenue needed to cover all fixed and variable costs of a business within a specific period.