Which of the Following Would an Auditor Be Most Likely

question 16

Multiple Choice

Which of the following would an auditor be most likely to use in determining the preliminary judgment about materiality?

• A)The entity's annualised interim financial statements.
• B)The contents of the management representation letter.
• C)The results of the internal control questionnaire.
• D)The anticipated sample size of the planned substantive tests.

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Definitions:

Income Statement

A financial statement that provides a summary of a company’s revenues, expenses, and profits/losses over a specified period.

Stock Dividends Distributable

Shares to be issued to shareholders as part of a stock dividend, representing a portion of earnings not paid out as cash dividends.

Current Liabilities

Obligations or debts that a company must pay within a year from the date of the balance sheet.

Cost Method

An accounting method used to value inventory or investments at their original cost.