An Auditor Has Been Assigned to Perform Tests of Controls

question 41

Multiple Choice

An auditor has been assigned to perform tests of controls for a client's cash disbursement system. Client files are kept electronically with no paper audit trail. In this case the auditor would need to rely on which of the following audit procedures?

• A) Analytical procedures and Inquiry
• B) Confirmations and Inquiry
• C) Observation and Inquiry
• D) Reperformance and Inquiry

Interpret profitability ratios to evaluate a company's earning potential.

Understand the significance of market valuation ratios and their impact on investor perceptions.

Analyze the capital structure of a company and assess leverage risks through debt ratios.

Evaluate a company's investment returns through return on equity (ROE) and return on assets (ROA).

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Definitions:

Shift Key

A modifier key on a keyboard used to type capital letters and other alternate "upper" characters.

Ruler

A tool in graphics and word processing software that helps users align text, graphics, and other elements within a document.

Modified Block

A format style for business letters where the body is left-aligned, and the date and closing begin at the center point.

Complimentary Close

A polite phrase or word used to conclude a letter or email, such as "Sincerely" or "Best regards".