In Preparing for a Repeat Engagement,the First Thing an Audit

question 42

Multiple Choice

In preparing for a repeat engagement,the first thing an audit team should do is ________.

• A)interview client management for any changes in the business and industry
• B)take a tour of a client's physical facilities,noting obvious inventory obsolescence or equipment maintenance issues
• C)obtain a copy of the year-end financial statements for the current year
• D)review prior-year working papers and permanent file documents

---

Definitions:

Accounts Receivable

Money owed to a company by its customers from goods or services sold on credit.

Budgeted Balance Sheet

A financial statement that projects the financial position of a company at a future date, based on budgeted transactions.

Schedule of Cash Receipts

A detailed plan or report of the expected times and amounts of incoming cash to the business.

Gross Profit Rate

The ratio of gross profit to net sales, showing the percentage of revenue that exceeds the cost of goods sold.