It Is Important for Auditors to Be On-Location on the Last

question 4

Multiple Choice

It is important for auditors to be on-location on the last day of the client's fiscal year when the client

• A) operates a restaurant that does a considerable amount of business on New Year's Eve.
• B) has significant inventory activities such that the receipts and shipments of inventories at year-end should be observed.
• C) relies upon electronic verification to indicate the timing of transactions.
• D) refuses to pay overtime rates for the audit team during its busy season.

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Definitions:

Concrete Reasoning

Thinking based on the physical, tangible world and immediate experiences rather than abstraction or hypothetical scenarios.

Formal Reasoning

The process of logical thinking and problem-solving that follows established rules and procedures, typically associated with mature cognitive development.

Analytic Thought

A cognitive process that involves breaking down complex information or problems into smaller parts or basic principles for better understanding and problem-solving.

Deductive Reasoning

A logical process where a conclusion follows necessarily from the stated premises, moving from general premises to a specific conclusion.