In the Absence of Regulation,for Auditing to Be an Effective

question 33

Multiple Choice

In the absence of regulation,for auditing to be an effective strategy for reducing the costs of attracting funds,the auditor must:

• A)be perceived to be truly independent and the accounting methods employed must be sufficiently well-defined.
• B)have been auditing the company for at least the last five years.
• C)be formally registered.
• D)belong to one of the major ('Big 4') global accounting firms.

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Definitions:

Reversing Entry

An accounting entry that is made at the beginning of a period to negate or cancel out the effects of an adjusting entry made at the end of the previous period.

Common Stock

Holding shares in a corporation that come with privileges to make decisions through voting and to earn dividends from the company's earnings.

Current Assets

Properties that an organization foresees turning into cash, selling, or expending over the course of a year or its operating cycle, whichever timeframe is more extended.

Operating Cycle

The duration of time it takes for a company to purchase inventory, sell it, and convert the sale into cash through customer payments.