In Creating Lead Schedules for an Audit Engagement,what Client Information

question 42

Multiple Choice

In creating lead schedules for an audit engagement,what client information is needed to begin?

• A) Interim financial information, such as third quarter sales, net income, and inventory and receivables balances.
• B) Specialized journal information, such as the invoice and purchase order numbers of the last few sales and purchases of the year.
• C) General ledger information, such as account numbers, prior-year account balances, and current year unadjusted information.
• D) Adjusting entry information, such as deferrals and accruals and reclassification journal entries.

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Definitions:

Accounts Receivable

Company receivables from goods or services provided to customers, pending payment.

Inventory

The sum of all goods, materials, and finished products held by a company for the purpose of sale in the regular course of business.

Statement of Cash Flows

A financial statement that shows the cash inflows and outflows of a company over a specific period of time, helping to assess its liquidity, solvency, and financial flexibility.

Cash Flows

The net amount of cash being transferred into and out of a business, indicating its liquidity level over a period.