Which of the Following Is a True Statement About an Auditor's

question 54

Multiple Choice

Which of the following is a true statement about an auditor's evaluation of an accounting system?

• A) If a company has a haphazard accounting system then the auditor has greater confidence that the financial statements are reliable.
• B) If a company has an efficient and orderly accounting system then the auditor has greater confidence that the financial statements are reliable.
• C) If a company has an efficient and orderly accounting system then the auditor must do more detailed work to verify that the financial statements are reliable.
• D) None of these are correct.

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Definitions:

Inventory Value

The total cost or market value of all the goods and materials held by a company for the purpose of resale or production.

Electric Items

Devices or appliances that operate using electrical power, ranging from household electronics to industrial machinery.

Beginning Inventory

The value of all the goods or materials held by a company at the start of an accounting period.

Net Sales

The total revenue generated from sales of goods or services, after deducting returns, allowances for damaged or missing goods, and discounts.