Which of the Following Procedures Would an Auditor Most Likely

question 2

Multiple Choice

Which of the following procedures would an auditor most likely perform to obtain evidence about the occurrence of subsequent events?

• A)Investigate changes in shareholders' equity occurring after year-end.
• B)Recalculate a sample of large-dollar transactions occurring after year-end for arithmetic accuracy.
• C)Confirm bank accounts established after year-end.
• D)Inquire of the entity's solicitor concerning litigation, claims and assessments arising after year-end.

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Definitions:

Cost of Goods Sold

The direct expenditures involved in the production of a company's sold goods, encompassing both materials and labor expenses.

Total Expenses

Total expenses refer to the sum of all costs and expenses incurred by a business during a specific period.

Perpetual Inventory System

A perpetual inventory system is a method of accounting for inventory that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

Gross Method

An accounting approach to recording purchases at their full invoice amount without deducting any cash discounts offered.