Of the Following,which Is the Most Important Procedure That an Auditor

question 55

Multiple Choice

Of the following,which is the most important procedure that an auditor should use when making an overall review of the income statement?

• A) Select sales and expense items and trace amounts to related supporting documents.
• B) Compare actual revenues and expenses with the corresponding figures of the previous year and investigate significant differences.
• C) Obtain, from the proper entity representative, inventory certificates for the beginning and ending inventory amounts that were used to determine cost of sales.
• D) Ascertain that the net income amount in the statement of cash flows agrees with the net income amount in the income statement.

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Definitions:

Limited Resources

The finite availability of resources, such as land, labor, and capital, which can restrict economic growth and development.

Unlimited Wants

The economic concept that humans have an endless number of desires for goods and services, even if resources for fulfilling those desires are limited.

Entrepreneurship

The act of starting and managing a business venture, along with any of its risks, in order to make a profit and innovate in the market.

Financial Capital

The money, credit, and other forms of funding that businesses use to invest in resources for future growth.