An Auditor Most Likely Would Limit Substantive Audit Tests of Sales

question 415

Multiple Choice

An auditor most likely would limit substantive audit tests of sales transactions when control risk is assessed as low for the occurrence assertion concerning sales transactions and the auditor has already gathered evidence supporting:

• A) Opening and closing inventory balances.
• B) Cash receipts and accounts receivable.
• C) Shipping and receiving activities.
• D) Cutoffs of sales and purchases.

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Definitions:

Budgeted Fixed Expenses

Estimated costs that do not change with the level of activity within a certain range and time period.

Inventory Purchases

The total cost of buying raw materials and goods for sale during a specific accounting period.

Collection Pattern

A specific sequence or method used to collect data, payments, or resources, often used in accounting or project management.

Operating Expenses

The costs associated with running a business that are not directly tied to the production of goods or services, such as selling, general, and administrative expenses.