Substantive Tests Must Be Designed to Tests Specific Audit Objectives

question 7

Multiple Choice

Substantive tests must be designed to tests specific audit objectives.
REQUIRED: For the following specific audit procedures, indicate the assertion that is being tested. Use the following letters, placing your response in the space provideD.
-Test the aging of accounts receivable, discussing long-overdue accounts with the
credit manager.

• A)Existence or occurrence
• B)Completeness
• C)Valuation or allocation
• D)Rights and obligations
• E)Presentation and disclosure

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Definitions:

Market System

An economic organization where choices relating to the investment in, production of, and distribution of goods and services are influenced by supply and demand dynamics, and where the prices are freely set in an open market pricing system.

Consumers Buy

Consumers buy refers to the action of individuals or households purchasing goods and services for personal use, driven by preferences, income, and prices.

Economic Profits

Profits calculated by subtracting both explicit and implicit costs from total revenues, which is a more comprehensive measure of true profitability.

Total Costs

The complete costs involved in the production of goods or services, including both fixed and variable costs.