In the Audit of Financial Statements,which of the Following Procedures

question 30

Multiple Choice

In the audit of financial statements,which of the following procedures would the auditor call an "extended procedure?"

• A)Measure the time lag between the date that cash receipts are recorded in the accounting records and the date that the deposit is credited to the bank account.
• B)Observe the client's physical inventory count and take test counts of stock in the warehouse.
• C)Send positive confirmations on accounts receivable balances.
• D)Interview the staff in the accounting department and document the controls over the recording of sales transactions.

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Definitions:

Autarky Price

The price of goods or services within a self-sufficient economy that does not engage in international trade.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, representing extra benefit to producers.

International Trade

The exchange of goods, services, and capital between countries and territories, often driven by comparative advantages and specialization.

Comparative Advantage

A principle in international trade that suggests a country or entity should produce and export goods and services for which it has a lower opportunity cost compared to other countries or entities.