Audit Sampling Would Be an Appropriate Method to Use on Which

question 77

Multiple Choice

Audit sampling would be an appropriate method to use on which one of the following procedures in an audit program?

• A) Examine a sample of duplicate sales invoices for credit approval by the credit manager.
• B) Observe whether the duties of the accounts receivable clerk are separate from handling cash.
• C) Review the aged schedule of accounts receivable to determine if receivables from officers are included.
• D) Review sales transactions for large and unreasonable amounts.

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Definitions:

Differential Cost

Differential cost, also known as incremental cost, is the difference in total cost that will result from selecting one option over another in decision-making processes.

Unused Capacity

Represents the available production or service facility capability that is not being utilized to its full potential.

Condensed Income Statement

A simplified financial statement that highlights a company's revenues, expenses, and profits over a specific period, omitting detailed line items.

Discontinuance

This term refers to the cessation of operations or activities in a specific business segment or location.