Final answer:
In the field of auditing within business, the four types of audit evidence are physical examination, confirmation, inquiry, and external confirmation. These are all essential for ensuring the validity and reliability of financial information and for the development of historical evidence during an audit.
Step-by-step explanation:
The student's question involves classifying audit evidence into different types, which is a fundamental concept in auditing, a field closely related to accounting within the realm of business. The types of audit evidence typically include:
- Physical examination: This is the inspection or count by the auditor of a tangible asset. This could involve counting inventory or examining physical documents.
- Confirmation: This is the receipt of a direct written response from a third party verifying the accuracy of information that was requested by the auditor.
- Inquiry: This consists of seeking information of knowledgeable persons within or outside the entity.
- External confirmation: This is a specific type of confirmation and involves the auditor obtaining evidence from third parties to confirm assertions made by management.
These categories are essential for the evaluation of the validity and reliability of the financial information provided and contribute to the development of historical evidence within the audit.