Before Applying Principal Substantive Tests to an Entity's Accounts Receivable

question 587

Multiple Choice

Before applying principal substantive tests to an entity's accounts receivable at an interim date, an auditor should:

• A) Consider the likelihood of assessing the risk of incorrect rejection too low.
• B) Project sampling risk at the maximum for tests covering the remaining period.
• C) Ascertain that accounts receivable are immaterial to the financial statements.
• D) Assess the difficulty in controlling the incremental audit risk.

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Definitions:

Glans

The sensitive bulbous structure at the distal end of the penis or clitoris.

Prepuce

The foreskin, a fold of skin covering the glans of the penis or clitoris; in males, it can be circumcised for health or cultural reasons.

Erectile Tissues

Spongy tissue that can fill with blood to enable erection in organs like the penis and clitoris.

Engorgement

The swelling or filling of a body part with blood or fluid, often referring to the breast during breastfeeding.