In Order to Obtain Audit Evidence About Account Balances, Many

question 37

Multiple Choice

In order to obtain audit evidence about account balances, many tests of controls may be enhanced by the added activity of tracing the sampled items from the inventory compilation report and verifying that the compilation amounts agree with the general ledger. This enhanced test would be considered a:

• A) substantive procedure.
• B) dual-purpose test.
• C) walkthrough.
• D) physical inventory count.

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Definitions:

Independent Variables

Factors in an experiment that are purposely manipulated to observe their effect on dependent variables.

Durbin-Watson Statistic

A measure used in statistics to detect the presence of autocorrelation in the residuals from a regression analysis.

First-Order Autocorrelation

First-order autocorrelation is a statistical measure indicating the correlation between values in a time series and their immediate predecessors.

Durbin-Watson D Statistic

A statistical tool designed to determine the existence of first-lag autocorrelation in the residuals of a regression analysis.