An Audit Team Is Auditing Sales Transactions

question 91

Multiple Choice

An audit team is auditing sales transactions. One step is to vouch a sample of debit entries from the accounts receivable subsidiary ledger back to the supporting sales invoices. The purpose of this audit procedure is to establish that:

• A)sales invoices represent bona fide sales.
• B)all sales have been recorded.
• C)all sales invoices have been properly posted to customer accounts.
• D)entries in the accounts receivable subsidiary ledger were properly invoiced.

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Definitions:

Input

Resources such as labor, materials, and capital used in the production of goods and services.

Average Fixed Cost

The fixed costs of production (costs that do not change with the level of output) divided by the quantity of output produced.

Output

The total quantity of goods or services produced by a firm or economy over a specific period.

Marginal Product

Refers to the additional output that is produced by adding one more unit of a specific input, assuming all other inputs are held constant.