The Auditor of Financial Statements Must Make Very Difficult Interpretations

question 71

Multiple Choice

The auditor of financial statements must make very difficult interpretations regarding authoritative literature.Additionally,the auditor must

• A)consider whether the application of a generally accepted accounting principle best portrays the economic activity of the company.
• B)force management to make certain decisions regarding their financial statements.
• C)disregard independence in order to find the underlying truth of the evidence.
• D)establish new criteria by which financial statements may be compared.

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Definitions:

Extraorganizational

Pertaining to activities or influences that are outside the scope or boundaries of a single organization.

ERP

Stands for Enterprise Resource Planning, a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, and manufacturing.

MRP

Material Requirements Planning, a computer-based inventory management system designed to assist production planning and inventory control.

TPS

A kind of information system, the Transaction Processing System, focuses on the accumulation, storage, modification, and retrieval of transactional data from an organization.