A Retailing Entity Uses the Internet to Execute and Record

question 54

Multiple Choice

A retailing entity uses the Internet to execute and record its purchase transactions. The entity's auditor recognizes that the documentation of details of transactions will be retained for only a short period of time. To compensate for this limitation, the auditor most likely would:

• A) Compare a sample of paid vendors' invoices to the receiving records at year-end.
• B) Plan for a large measure of tolerable misstatement in substantive tests.
• C) Perform tests several times during the year, rather than only at year-end.
• D) Increase the sample of transactions to be selected for cutoff tests.

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Definitions:

Financial Controller

A senior executive who oversees the accounting activities, financial reporting, and the development of internal control policies.

Senior Accountants

Experienced accounting professionals responsible for managing financial statements and ledgers, ensuring compliance with regulations, and performing audits.

Integrative Bargaining

A negotiation strategy where all parties work together to find a mutually beneficial solution or agreement.

Preserving Relationship

The effort to maintain and protect the quality and continuity of a relationship despite challenges or disagreements.