Which of the Following Circumstances Most Likely Would Cause an Auditor

question 25

Multiple Choice

Which of the following circumstances most likely would cause an auditor to believe that material misstatements may exist in an entity's financial statements?

• A)Accounts receivable confirmation requests yield significantly fewer responses than expected.
• B)Audit trails of computer-generated transactions exist only for a short time.
• C)The chief financial officer does not sign the management representation letter until the last day of the auditor's fieldwork.
• D)Management consults with other accountants about significant accounting matters.

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Definitions:

FOB Shipping Point

A shipping term indicating that the buyer assumes transportation costs and risk of loss once the goods leave the seller's premises.

Consignee

The individual or entity designated to receive goods being shipped or transported, who may not be the actual owner of the goods until certain conditions are met.

Consignment

A business arrangement in which goods are left in the possession of another party to sell, but ownership remains with the supplier until the goods are sold.

Inventory Items

Goods and materials that a business holds for the ultimate goal of resale or production in the course of operations.