Based on a Study and Evaluation Completed at an Interim

question 41

Multiple Choice

Based on a study and evaluation completed at an interim date,the auditor concludes that no significant internal control weaknesses exist.The records and procedures would most likely be tested again at year-end if

• A) Compliance tests were not performed by the internal audit staff during the remaining period.
• B) The internal control system provides a basis for reliance in reducing the extent of substantive procedures.
• C) The auditor used nonstatistical sampling during interim compliance testing.
• D) Inquiries and observations lead the auditor to believe that conditions within the internal control system have changed.

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Definitions:

Return on Common Equity

A financial ratio indicating the amount of net income returned as a percentage of shareholders equity, measuring a company's profitability in generating profits from its equity financing.

Long-term Debt

Borrowings and financial obligations that are due for repayment beyond the period of one year.

Current Asset Turnover Ratio

A financial metric that measures the efficiency of a company's use of its current assets by comparing its net sales to its current assets.

Accounts Receivable

Money owed to a company by customers for goods or services that have been delivered or used but not yet paid for.