A Retail Entity Uses Electronic Data Interchange (EDI) in Executing

question 819

Multiple Choice

A retail entity uses electronic data interchange (EDI) in executing and recording most of its purchase transactions. The entity's auditor recognizes that the documentation of the transactions will be retained for only a short period of time. To compensate for this limitation, the auditor most likely would:

• A) Increase the sample of EDI transactions to be selected for cutoff tests.
• B) Perform tests several times during the year, rather than only at year-end.
• C) Plan to make a 100% count of the entity's inventory at or near the year-end.
• D) Decrease the assessed level of control risk for the existence or occurrence assertions.

---

Definitions:

Fried Twinkies

A snack created by deep-frying Twinkies, often resulting in a crispy outside and soft, warm inside, popular in fairs and festivals.

Tax Burden

The total impact of taxes on an individual or business, including the effects on income and purchasing power.

Producers

Individuals or organizations that create goods or services for sale or exchange in an economic system.

Price Paid

The amount of money exchanged for a good or service at the time of a transaction.