Why Do Auditors Inspect Records and Documents

question 7

Multiple Choice

Why do auditors inspect records and documents?

• A) to check the dates of transactions
• B) for evidence that management have authorized significant purchases
• C) to check that a transaction occurred
• D) all of the above

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Definitions:

Bad Debt Expense

Bad debt expense is an estimated expense that a company records to cover receivables that are unlikely to be collected, acknowledging these credits as losses.

Accounts Receivable Turnover Ratio

A financial metric that measures how efficiently a company collects revenue from its customers by comparing net credit sales to average accounts receivable.

Financial Condition

A description of an entity's financial status, including assets, liabilities, and equity at a specific point in time.

Service Charge

Fees charged for services provided, typically by banks or other financial institutions, which may include account maintenance or transaction fees.