In Many Audits of Sales Transactions, No Substantive Tests of Transactions

question 12

Multiple Choice

In many audits of sales transactions, no substantive tests of transactions are performed for the completeness objective because:

• A) the unrecorded sales cause a reduction of accounts receivable; therefore, the ratios of the two financial statements will not be misleading.
• B) understatements of assets and income are a greater concern than overstatements.
• C) overstatements of assets and income are a greater concern than understatements.
• D) it doesn't matter if income is understated because the savings on income tax offsets the reduced revenue and net income is correct.

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Definitions:

Paralegals

Professionals within the legal sector who support lawyers in various tasks, including conducting research, organizing documents, and drafting legal correspondence, but are not authorized to practice law.

In-House Attorneys

Lawyers who are employed by a company or organization to provide legal advice and services exclusively to that entity.

Outside Consultants

Experts or professionals hired from outside an organization to provide specialized advice or services.

Corporate Meetings

Gatherings or assemblies of individuals, usually stakeholders or employees, within a corporation to discuss business matters, strategies, or performance.