In the Sales and Collection Cycle,the Results of the Tests

question 26

Multiple Choice

In the sales and collection cycle,the results of the tests of controls determine

• A)the extent to which planned detection risk is satisfied for each accounts receivable objective.
• B)whether assessed control risk for sales and cash receipts needs to be revised.
• C)if tests of details of balances need to be performed.
• D)whether positive or negative confirmations should be used for this engagement.

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Definitions:

Put

A put is an options contract giving the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price before the contract expires.

Option

A financial contract granting the buyer the right, but not the obligation, to buy or sell an asset at a set price within a specific time.

Asian Options

A type of option where the payoff depends on the average price of the underlying asset over a certain period of time rather than at maturity.

American Options

Options that can be exercised at any time before expiration, as opposed to European options which can only be exercised on the expiration date.