Which One of the Following Statements Regarding the Five Types

question 72

Multiple Choice

Which one of the following statements regarding the five types of audit tests in the sales and collection cycle is NOT correct?

• A) Analytical procedures are used to test the relationships among the account balances in the cycle, both to each other and to prior years.
• B) Tests of details of balances are used to verify ending account balances.
• C) Substantive tests of transactions are used both to test the effectiveness of internal controls and to test the dollar amount of these transactions.
• D) Tests of controls are used primarily to test the efficiency of internal controls over the five classes of transactions.

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Definitions:

Potential Venture

A business idea or project that has the possibility of being developed into a successful commercial enterprise.

Vague

Describing something that is unclear, undefined, or not precise in meaning or details.

Venture Capital Funds

Pools of capital that are allocated to invest in high-growth potential startups and emerging companies.

General Partners

Individuals who participate in the management of a partnership and have unlimited personal liability for the debts and obligations of the partnership.