During the Audit of EmpireAge,Inc

question 46

Multiple Choice

During the audit of EmpireAge,Inc. ,the auditor notes a large series of checks that does not clear for an unusually long time after period end.What may the auditor suspect from this observation?

• A)Vendors are eager to get their payments.
• B)The reconciliation is accurate.
• C)Cash does not exist.
• D)The presence of held-checks at period-end.

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Definitions:

Recognized Gain

An increase in the value of an asset that has been sold or deemed to have increased in value officially on financial statements.

Selling Price

The amount for which a product or service is sold, not necessarily equal to the cost or intrinsic value of the item.

Carrying Value

The book value of an asset or liability on a company's balance sheet, calculated as the original cost minus depreciation or amortization.

Intra-Entity Inventory Sales

Sales transactions of inventory between divisions or subsidiaries within the same parent company, not affecting consolidated financial results until sold externally.