An Auditor Plans to Apply Substantive Tests to the Details

question 19

Multiple Choice

An auditor plans to apply substantive tests to the details of asset and liability accounts as of an interim date rather than as of the balance sheet date.The auditor should be aware that this practice

• A)Eliminates the use of certain statistical sampling methods that would otherwise be available.
• B)Presumes that the auditor will reperform the tests as of the balance sheet date.
• C)Should be especially considered when there are rapidly changing economic conditions.
• D)Potentially increases the risk that errors that exist at the balance sheet date will not be detected.

Comprehend the approaches to recording bad debt expense and their effects on accounting records.

Learn the significance of reporting accounts receivable at their net realizable value.

Understand the process and importance of aging accounts receivable.

Recognize how companies may manage earnings through provisions for bad debts.

---

Definitions:

Goal

An intended outcome or target that an individual or organization aims to achieve.

Compounded Semi-annually

The process of adding interest to the principal sum of a loan or deposit twice a year, also accounting for the interest accumulated over the period.

Monthly Payment

Regular payment made every month, commonly in the context of repaying loans or paying bills.

Home Renovations

Improvements or alterations made to a residential property, often intended to increase its value, functionality, or aesthetic appeal.