Substantive Tests Provide the Auditor with Evidence About Whether

question 73

Multiple Choice

Substantive tests provide the auditor with evidence about whether

• A)the account balance is correct for income statement accounts
• B)the account balance is correct for balance sheet accounts
• C)the transactions recorded in the financial statements are correct for income statement accounts
• D)the transactions recorded in the financial statements are correct for balance sheet accounts
• E)the transactions recorded in the financial statements are correct for internal control accounts
• F)both A and B
• G)both B and C
• H)both D and E

Understand the reasons behind banks requiring companies to maintain compensating balances and their impact on business operations.

Understand the importance of properly reporting inventory in financial statements.

Comprehend the differences and applications of FIFO, LIFO, and average inventory costing methods.

Recognize the role of purchase orders in inventory control.

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Definitions:

Creatively

The ability to think about or plan something in a new and imaginative way.

Fully Functioning Person

A term used by Carl Rogers to describe an individual who is continually growing and realizing their potential.

Aware

Having knowledge or consciousness of something; being informed or cognizant of events or situations.

Spontaneous

Behaviors or actions that are performed without premeditation or planning, often arising naturally.