In Order to Further Understand Internal Control,an Auditor May Use

question 71

Multiple Choice

In order to further understand internal control,an auditor may use inquiry methods by:

• A)interviewing key employees to gain further insight into the internal control environment.
• B)observing the safeguarding of assets by checking locked doors and safes.
• C)tracing a transaction from the boundary of the organization through to the final reporting.
• D)documenting thoroughly the internal control through the use of narratives.

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Definitions:

Prior Quarter Sales

The total revenue generated by a business in the quarter immediately preceding the current one.

Accounts Payable

The amount of short-term debts or obligations a company owes to its suppliers or creditors.

Account Receivable

Debts owed by customers to a company for products or services that have been dispatched but not settled.

Inventory Sale

The process of selling goods from a company's inventory to generate revenue, often tracked to understand sales trends and inventory turnover.