Physical Observation by an Audit Team Would Include

question 75

Multiple Choice

Physical observation by an audit team would include

• A) Examination of a sales invoice.
• B) Recalculation of depreciation.
• C) Examination of securities certificates.
• D) Scanning of the expense accounts for unusual transactions.

---

Definitions:

Balance Sheet

A financial statement that provides a snapshot of a company’s financial position at a specific point in time, showing assets, liabilities, and shareholder equity.

Liability

A financial obligation or debt owed by a company to others, often categorized as current or long-term.

Incremental Borrowing Rate

The interest rate a company would have to pay if it borrows funds, serving as an estimate for lease accounting when the implicit rate in the lease is unclear.

Balance Sheet

An accounting document that outlines the assets, liabilities, and owners' equity of a company on a specific date.