As Part of Gaining an Initial Understanding of Internal Control,an

question 86

Multiple Choice

As part of gaining an initial understanding of internal control,an auditor is required to do all of the following except:

• A) Consider factors that affect the risk of material misstatement.
• B) Ascertain whether internal control policies and procedures have been placed in operation.
• C) Identify the types of potential misstatements that can occur.
• D) Obtain knowledge about the operating effectiveness of the internal control.

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Definitions:

Cash Receipts Journal

A dedicated accounting journal used to record all cash inflows or money received by a business.

General Journal

A chronological record of a company's financial transactions.

Revenue Journal

A revenue journal is a ledger used to record a company’s sales transactions, typically detailing the sale of goods or services on credit.

Cash Revenues

Income received by a company in the form of cash from its operational activities.