Which of the Following Procedures Would an Auditor Most Likely

question 76

Multiple Choice

Which of the following procedures would an auditor most likely perform to obtain evidence about an entity's subsequent events?

• A) Reconcile bank activity for the month after the balance sheet date with cash activity reflected in the accounting records.
• B) Obtain a letter from the entity's attorney describing any pending litigation, unasserted claims, and loss contingencies.
• C) Review the treasurer's monthly reports on temporary investments owned, purchased, and sold.
• D) Examine on a test basis the purchase invoices and receiving reports for several days after the inventory date.

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Definitions:

Background Research

The initial phase of investigation that gathers existing information or data on a topic before embarking on new research.

Hypothesis

An assumption or proposition that is made on the basis of limited evidence as a starting point for further investigation.

Experimentation

The process of trying out new ideas, concepts, or strategies to test hypotheses and gain insights that can lead to innovation or improvement.

Careful

Paying close attention to detail and being cautious to avoid mistakes or accidents.