At a Minimum, Professional Skepticism

question 59

Multiple Choice

At a minimum, professional skepticism:

• A) is supportive of client's claim of fraud.
• B) is a neutral but disciplined approach to detection and investigation.
• C) assumes that the management is dishonest and therefore must "pull every loose thread" to find the evidence and fraud.
• D) assumes unquestioned loyalty by newer and younger employees.

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Definitions:

Permanent Accounts

These are balance sheet accounts whose balances are carried over to the next accounting period, such as assets, liabilities, and equity accounts.

Income Summary Account

A temporary account used in accounting to transfer the sums of revenues and expenses at the end of an accounting period.

Dividends Declared Account

An account used to record the amount of dividends that a company's board of directors has decided to distribute to its shareholders.

Post-closing Trial Balance

A list of all accounts still open after closing entries are made, used to verify the equality of debits and credits.