An Audit Strategy

question 32

Multiple Choice

An audit strategy:

• A) is determined by the client
• B) involves determining the amount of time to be spent testing the client's internal controls and conducted detailed substantive testing
• C) sets the scope, timing and direction of the audit
• D) both b and c

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Definitions:

Expense Accounts

These are ledgers that track the costs incurred by a business during its operations, excluding the purchase of inventory.

Income Summary Account

A temporary ledger account used to transfer the balances of all revenue and expense accounts at the end of an accounting period to determine the net income or loss.

Proprietorship

A business owned and operated by a single individual, with no legal distinction between the owner and the business entity.

Expenses

Expenses are the costs incurred in the process of generating revenue, including operational costs, salaries, and utility expenses, critical for determining a company's net income.