Which of the Following Best Describes Tests of Details of Balances

question 74

Multiple Choice

Which of the following best describes tests of details of balances?

• A) audit procedures designed to test for monetary misstatements in the accounts summarized in the financial statements
• B) audit procedures designed to test for the monetary amounts of transactions
• C) audit procedures designed to test for reasonableness of account balances
• D) audit procedures designed to test for effectiveness in recording accounting information

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Definitions:

Adjusted Trial Balance

An adjusted trial balance is a list of all account titles and balances after adjustments have been made for accruals, deferrals, and other adjustments, ensuring the accounts are balanced before preparing financial statements.

Total Liabilities

The sum of all financial obligations a company owes to external parties, including loans, accounts payable, and mortgages.

Closing Process

The closing process in accounting involves summarizing all revenues and expenses for the period and transferring the balances to the owner's equity account to prepare for the next accounting period.

Temporary Accounts

These are accounts that are closed at the end of each accounting period, including revenues, expenses, dividends, and income summary accounts, to prepare the company for a new accounting period.