Which of the Following Is Most Likely to Be Considered

question 53

Multiple Choice

Which of the following is most likely to be considered a risk assessment procedure relating to internal control?

• A)Confirm accounts receivable.
• B)Perform a test of a control relating to payroll.
• C)Take test counts of the year-end inventory.
• D)Trace a transaction through the information system relevant to financial reporting.

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Definitions:

Solvency

The ability of a company to meet its long-term financial obligations and sustain operations, indicating financial health.

Vertical Analysis

A method of financial statement analysis in which each line item is listed as a percentage of a base figure within the statement, facilitating comparison across periods and entities.

Base Amount

A reference value or starting point against which changes or adjustments are measured.

Vertical Analysis

A method of financial statement analysis in which each entry is listed as a percentage of a base figure within the same period, facilitating comparison and trend identification.