An Entity's Income Statements Were Misstated Due to the Recording

question 23

Multiple Choice

An entity's income statements were misstated due to the recording of journal entries that involved debits and credits to an unusual combination of expense and revenue accounts.Auditors most likely could have detected this irregularity by

• A)Tracing a sample of journal entries to the general ledger.
• B)Evaluating the effectiveness of the internal control policies and procedures.
• C)Investigating the reconciliations between controlling accounts and subsidiary records.
• D)Performing analytical procedures designed to disclose differences from expectations.

---

Definitions:

Narcotic

A drug or other substance affecting mood or behavior and sold for nonmedical purposes, especially an illegal one.

Amphetamines

A class of stimulant drugs that affect the central nervous system, increasing alertness, concentration, and physical energy.

Epinephrine

Also known as adrenaline, it is a hormone and medication that plays a key role in the body's fight-or-flight response by increasing blood flow to muscles, output of the heart, pupil dilation, and blood sugar.

Endorphins

Neurotransmitters produced in the brain that act as natural painkillers and are also associated with feelings of pleasure.