Directional Testing Involves Testing Transactions or Balances Primarily for Which

question 43

Multiple Choice

Directional testing involves testing transactions or balances primarily for which type of error?

• A) Overstatement.
• B) Understatement.
• C) Either overstatement or understatement.
• D) Either overstatement nor understatement.

---

Definitions:

Income

Income refers to the money received by an individual or business for work, from investments, or from various sources over a period, typically used to fund expenses.

Wealth

An abundance of valuable possessions or money, or the total market value of all physical and intangible assets owned by an individual, community, company, or country, minus all debts.

Consumption

The use of goods and services by households, often considered as an economic indicator reflecting the level of consumer spending.

Effective Tax Rate

The average rate at which an individual or corporation is taxed, calculated as the total tax paid divided by the taxable income.