If the Auditor Traces a Sample of Receiving Reports to the Perpetual

question 23

True/False

If the auditor traces a sample of receiving reports to the perpetual inventory records,the auditor is testing the control of validity.

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Definitions:

Accounts Payable

Liabilities of a business that are due to be paid to creditors within a short period of time, usually one year.

Vertical Analysis

A method of financial statement analysis in which each line item is listed as a percentage of a base figure within the statement.

Common-Size Income Statement

A financial statement that presents all items as percentages of a common base figure, such as total sales, facilitating comparison across periods or companies.

Net Sales

The revenue from sales of goods or services after deducting returns, allowances for damaged or missing goods, and discounts.