After the Auditor Has Prepared a Flowchart of the Internal

question 11

Multiple Choice

After the auditor has prepared a flowchart of the internal controls surrounding sales and evaluated the design of the system,the auditor would perform tests of controls on all control activities

• A) Documented in the flowchart.
• B) Considered to be weaknesses that might allow errors to enter the accounting system.
• C) That the auditor plans to rely on.
• D) That would aid in preventing fraud.

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Definitions:

Income Tax Expense

The cost incurred by businesses or individuals due to earnings, represented as an expense in financial statements and affecting net income.

Retained Earnings

The portion of net income that is not distributed to shareholders as dividends but is kept by the company for reinvestment.

Total Assets

The sum of all resources owned by a company, valued in monetary terms.