Which of the Following Procedures Would an Auditor Most Likely

question 8

Multiple Choice

Which of the following procedures would an auditor most likely perform for year-end accounts receivable confirmations when the auditor did not receive replies to second requests?

• A) Inspect the shipping records documenting the merchandise sold to the debtors.
• B) Review the cash receipts journal for the month prior to the year-end.
• C) Intensify the study of the internal control structure concerning the revenue cycle.
• D) Increase the assessed level of detection risk for the existence assertion.
• E) Trace the cash disbursements journal for the month prior to the year-end.

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Definitions:

Individual Assets

Distinct items of property or investments owned by individuals, such as stocks, bonds, real estate, or personal property.

Utility Function

A mathematical representation in economics of a consumer's preference ordering over a set of goods or outcomes.

Risk-Free Asset

An asset with a certain rate of return; often taken to be short-term T-bills.

Indifference Curve

A graphical representation in microeconomics showing different combinations of two goods that provide an individual with the same level of satisfaction or utility.