Auditors Can Assess the Adequacy of Their Client's Closing Procedures

question 18

Multiple Choice

Auditors can assess the adequacy of their client's closing procedures by:

• A) Checking the accuracy of accrual calculations around year-end.
• B) Looking at earnings trends to assess whether reported income is in line with similar periods in prior years.
• C) a and b
• D) None of the above.

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Definitions:

Personal Prejudice

An individual's preconceived opinion or bias against something or someone without reasonable justification.

Firm Profits

The financial gain a company receives after subtracting all its costs from its total revenue.

Earnings Ratio

Typically refers to the price-to-earnings (P/E) ratio, which measures a company's current share price relative to its per-share earnings.

Annual Earnings

The total amount of money earned by an individual or entity in one year, often before taxes.