Which of the Following Procedures Is an Auditor Most Likely

question 6

Multiple Choice

Which of the following procedures is an auditor most likely to perform for year-end accounts receivable confirmations when the auditor did not receive replies to second requests?

• A)Review the cash receipts journal for the month prior to the year-end.
• B)Intensify the study of the internal control system over the revenue cycle.
• C)Increase the assessed level of detection risk for the existence assertion.
• D)Inspect the shipping records documenting the merchandise sold to the debtors.

Distinguish between various financial periods, including fiscal and natural business years.

Explain the rationale behind specific journal entries.

Comprehend the sequence and methodology of recording business transactions.

Identify and correct common posting errors and understand their effects on financial statements.

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Definitions:

Requisitions of Raw Materials

Requests or orders for the purchase of raw materials needed in the manufacturing process.

Purchases of Raw Materials

This refers to the acquisition of the basic materials needed for production or manufacturing processes.

Direct Labor Cost

The expense incurred by a company to pay workers who are directly involved in the production of goods or services.

Cost of Goods Manufactured

The total production cost incurred by a company to manufacture products in a specific period, including materials, labor, and overhead costs.