The audit firm of Lake and South,LLP is wrapping up its audit of Brycestone,Inc.The evidence has been relatively easy to obtain except in one case.Which of the following would represent a balance or transaction that would be most difficult for Lake and South to obtain evidence?
A)prepaid expenses
B)cash
C)accrued wages and salaries
D)accrued warranties

Question

Quizplus · Accepted Answer

Accrued warranties would be the most difficult balance to obtain evidence for because they are often estimated by management and may involve judgments about the likelihood of future warranty claims. This requires extensive testing and analysis to determine if the estimates are reliable and accurate. Meanwhile, prepaid expenses, cash, and accrued wages and salaries are typically easier to verify through bank statements, invoices, and employee records.

The Audit Firm of Lake and South,LLP Is Wrapping Up