Following Are Several Statements Regarding Accounting Records or Audit Documentation

question 25

Multiple Choice

Following are several statements regarding accounting records or audit documentation.Which of the statements is correct?

• A) Accounting records belong to the client.
• B) Documentation of an auditor's understanding of client's internal control system is not necessary.
• C) Audit documents may be regarded as a substitute for the client's accounting records.
• D) The independent auditor may discard audit documents after two years.

---

Definitions:

Interest Income

Income earned from the lending of money or from investments in securities that pay interest, such as bonds.

Time Extension

Granting additional time beyond the original deadline to complete a task or fulfill a contract.

Accounts Receivable

Funds that customers owe to a business for products or services already provided but not yet compensated for.

Notes Receivable

Financial assets representing written promises for future receipt of cash.