An Entity's Financial Statements Were Misstated Over a Period of Years

question 47

Multiple Choice

An entity's financial statements were misstated over a period of years due to large amounts of revenue being recorded in journal entries that involved debits and credits to an illogical combination of accounts.The auditor could most likely have been alerted to this fraud by

• A) Scanning the general journal for unusual entries.
• B) Performing a revenue cutoff test at year-end.
• C) Tracing a sample of journal entries to the general ledger.
• D) Examining documentary evidence of sales returns and allowances recorded after year-end.

---

Definitions:

Running

A form of locomotion allowing humans and animals to move rapidly on foot, often utilized as a means of exercise or competition.

Kicking

A physical action involving striking or propelling something with the foot.

Intellectual Level

Refers to the cognitive ability of an individual including reasoning, problem-solving, and decision-making capacities.

Mental Age

A measure of an individual's cognitive ability expressed as the age at which an average person reaches the same level of cognitive performance.