For the balance sheet,
A)the auditor gathers evidence to support the transactions recorded in the accounts for 12 months
B)the auditor gathers evidence to determine whether the account balance on one day of the year,the end of the year,is correct
C)the tests that the auditor uses to gather evidence are called substantive tests of transactions
D)the tests that the auditor uses to gather evidence are called substantive tests of balances
E)the tests that the auditor uses to gather evidence are called substantive tests of controls
F)both A and B
G)both C and D
H)Both B and D

Question

Quizplus · Accepted Answer

The balance sheet reflects the financial position of the company at the end of the year, so the auditor's main concern is with the accuracy of the account balances on that date. Therefore, the auditor gathers evidence to determine whether the account balances are correct, which involves performing substantive tests of balances. These tests are used to gather evidence about the ending balances in the accounts, rather than transactions that occurred throughout the year. Therefore, both options B and D are correct. Option A is incorrect because the auditor typically examines transactions throughout the year, but only to identify potential errors or misstatements that could impact the ending account balances. Option C is also incorrect because substantive tests of transactions are used to gather evidence about the occurrence, completeness, accuracy, and classification of transactions, but are not specifically related to the balance sheet. Option E is not relevant to the balance sheet at all.

For the Balance Sheet