The auditor should examine subsequent realization of revenue such as dividends, interest,commission, etc to:_____________?
Correct answer: A. identify cases of unrecorded revenue
- A. identify cases of unrecorded revenue
- B. ensure proper disclosure in the balance sheet
- C. recompute accrued income on the data of balance sheet
- D. Any of these
Explanation
Checking whether dividends, interest and commissions are received after year-end can reveal income earned before year-end but omitted from the records. This makes the primary purpose the detection of unrecorded revenue.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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