Which of the Following Procedures Would an Auditor Most Likely

question 76

Multiple Choice

Which of the following procedures would an auditor most likely perform to obtain evidence about an entity's subsequent events?

• A) Reconcile bank activity for the month after the balance sheet date with cash activity reflected in the accounting records.
• B) Obtain a letter from the entity's attorney describing any pending litigation, unasserted claims, and loss contingencies.
• C) Review the treasurer's monthly reports on temporary investments owned, purchased, and sold.
• D) Examine on a test basis the purchase invoices and receiving reports for several days after the inventory date.

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Definitions:

Reaction

A process in which substances interact to form new compounds or to change their physical or chemical properties.

Boiling Point

The temperature at which a substance transitions from the liquid phase to the gas phase under standard atmospheric pressure.

Compounds

Substances formed by chemically bonding two or more elements together in definite proportions.

Compound

A material composed of at least two elements that are chemically united in a constant proportion.