An Auditor Compares This Year's Revenues and Expenses with Those

question 38

Multiple Choice

An auditor compares this year's revenues and expenses with those of the previous year and investigates all changes exceeding 10 per cent.By carrying out this procedure the auditor would be most likely to learn that:

• A)an increase in property tax rates has not been recognised in the client's accrual.
• B)the provision for uncollectible accounts is inadequate because of worsening economic conditions.
• C)fourth-quarter payroll taxes were not paid.
• D)the client changed its capitalisation policy for small non-current assets.

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Definitions:

Pairwise Majority Voting

A voting system where candidates are compared in pairs, with each pair being voted on separately, to determine the most preferred option by majority decision.

Condorcet Paradox

A situation in social choice theory where collective preferences can be cyclic (i.e., not transitive), even if the individual preferences within the group are rational and transitive. It highlights the complexity of voting systems and decision making.

Individual Preferences

The personal likes or dislikes of an individual, which influence their decisions and behavior.

Social Preferences

Social Preferences indicate how individuals’ decision-making is influenced by the welfare of others, beyond self-interest.