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Questions and Answers
What is one common challenge in auditing a sole proprietorship?
What is one common challenge in auditing a sole proprietorship?
- Difficulty in determining profit-sharing provisions
- Difficulty in segregating personal and business transactions (correct)
- Difficulty in tracing initial capital investment
- Difficulty in obtaining written partnership agreements
What should auditors verify when auditing a sole proprietorship account?
What should auditors verify when auditing a sole proprietorship account?
- Written partnership agreement
- Method used in dividing the year's earnings
- Distribution of net income
- Additions to cash asset records (correct)
What should auditors be particularly interested in when auditing partnership accounts?
What should auditors be particularly interested in when auditing partnership accounts?
- Verifying personal expenditures paid with company funds
- Obtaining written partnership agreements
- Ensuring distribution of net income according to profit-sharing provisions (correct)
- Segregating personal and business transactions
What may auditors suggest if a partnership operates without a written partnership agreement?
What may auditors suggest if a partnership operates without a written partnership agreement?
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What corrections may be required in auditing a sole proprietorship account?
What corrections may be required in auditing a sole proprietorship account?
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