Question

In: Accounting

Chose the correct answer : The auditor made an independent computation of the depreciation expense reported...

Chose the correct answer :
The auditor made an independent computation of the depreciation expense reported in the client's financial statements the procedure performed by the auditor is:
A. Vouching
B. re-calculation
C. Tracing
D. Inspection of documents



Solutions

Expert Solution

Option B. Re-calculation is the correct answer

Explanation

A. Vouching

Vouching is refers to examining documentary evidence to ascertain the authenticity of entries in the books of accounts. In other words it is an inspection by the auditor of evidence supporting the transactions made in the books. Vouching is a technique used by an auditor to judge the truth and fairness of entries in the books of accounts.

B. Re-calculation

Re-calculation is the type of audit procedure that normally done by re-performing the works that done by client in the purpose of assessing if there any different between audit’s work and client’s work.

For example, an auditor might re-perform depreciation calculation and assess if there any different between auditor calculation and client’s calculation.

C. Tracing

Tracing refers to select an accounting transaction then following it into the journal or ledger. The direction of testing in this case is from the source documents to the journals or ledgers and tests whether transactions that occurred are recorded in the books of accounts.

D. Inspection of Documents

Inspection is refer to verification or vouching documents. This is one of the most importance and it can be 60% of audit work involve with the inspection of documents.

For example, auditor examine the sales invoices that records in financial reports.

ekkarill92 answered 1 year ago
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