Observation Involves an Auditor

question 36

Multiple Choice

Observation involves an auditor:

• A)watching a procedure being carried out by another party
• B)asking questions to gain an understanding of various matters throughout the audit
• C)redoing processes conducted by the client
• D)checking the mathematical accuracy of client records

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Definitions:

Material Amount

A sum of money that is large enough to influence the economic decisions of users based on the financial statements of an entity.

Reporting Period

The specific time span covered by financial statements, typically one fiscal year or quarter, for which an entity reports its financial performance and position.

Carrying Amount

The book value of assets and liabilities, calculated as the original cost minus any accumulated depreciation, impairment, or amortization.

Fair Value

The expected proceeds from an asset sale or the financial commitment for a liability shift in an orderly engagement among market participants at the time of determining value.