Which of the Following Audit Procedures Would an Auditor Most

question 1013

Multiple Choice

Which of the following audit procedures would an auditor most likely perform to test controls relating to management's assertion concerning the completeness of sales transactions?

• A) Verify that extensions and footings on the entity's sales invoices and monthly customer statements have been recomputed.
• B) Inspect the entity's reports of prenumbered shipping documents that have not been recorded in the sales journal.
• C) Compare the invoiced prices on prenumbered sales invoices to the entity's authorized price list.
• D) Inquire about the entity's credit granting policies and the consistent application of credit checks.

---

Definitions:

Contingent Liability

A potential liability that may become an actual liability in the future.

Warranty Expense

Costs associated with the obligation to repair or replace a product due to defects for a specified period.

Bad Debt Expense

An expense account to record uncollectible receivables.

Payroll Activities

The administrative tasks associated with processing employee wages, withholding taxes, and ensuring the accurate calculation of pay.