The Audit Process Can Be Viewed as Having Two Stages

question 27

Multiple Choice

The audit process can be viewed as having two stages.Which of the following statements regarding these stages is FALSE?

• A)The two stages reflect the two major categories of audit report reservations: accounting deficiency reservations based on stage one,and audit deficiency reservations based on stage two.
• B)The distinction between audit and accounting uncertainties is critical for audit report reservations.
• C)Stage one deals with audit evidence uncertainties,those related to the amount of evidence gathered.
• D)In stage two,the auditor uses the evidence obtained in stage one to make a determination of the appropriateness of financial reporting relative to GAAP and fairness of presentation criteria.

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Definitions:

Volume of Sales

The total number of units of a product or service sold within a specific time frame, often used as an indicator of a company’s performance or consumer demand.

Corporations

Corporations are legal entities owned by shareholders, capable of entering into contracts, owning assets, and being held liable for debts, formed to engage in business activities.

Partnerships

An official form of business where management tasks and earnings are divided among two or more participants.

Legal Partnership

A formal arrangement by two or more parties to manage and operate a business and share its profits, which can have various forms such as general, limited, and limited liability partnerships.