When Conducting Detailed Substantive Procedures, Auditors Search for Evidence That

question 65

Multiple Choice

When conducting detailed substantive procedures, auditors search for evidence that

• A) the client's internal control system is operating effectively.
• B) all transactions have been recorded in the correct accounts.
• C) no fraud has occurred during the year.
• D) they have remained independent of their clients.

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been subtracted from revenue.

Revenues

The income generated from normal business operations, calculated by multiplying the price of goods or services by the quantity sold.

Dividends Payable

A liability account in a company's balance sheet indicating the amount in dividends that the company owes to its shareholders but has not yet paid out.

Operating Expenses

Expenses incurred from a company's operational activities, excluding the cost of goods sold, taxes, and interest expenses.