The primary difference between an audit of the statement of financial position and an audit of the income statement lies in the fact that the audit of the income statement deals with the verification of:
A)authorisations.
B)transactions and events.
C)cut-offs.
D)presentation and disclosure.

Question

Quizplus · Accepted Answer

An audit of the income statement primarily deals with verifying transactions and events recorded in the period under audit. This involves testing the completeness, accuracy, and validity of the transactions and arrangements that contribute to the revenue, expense, and other income statement items. On the other hand, an audit of the Statement of Financial Position (previously known as the balance sheet) focuses on the verification of the position and status of the assets, liabilities, and equity accounts as of a particular date. This involves verifying ownership, valuation, existence, and completeness of the account balances. Cut-offs, authorisations, and presentation and disclosure are important considerations in both audits, but their significance varies for different financial statement assertions.

The Primary Difference Between an Audit of the Statement of Financial