In Many Audits of Sales Transactions, No Substantive Tests of Transactions

question 63

Multiple Choice

In many audits of sales transactions, no substantive tests of transactions are performed for the completeness objective because:

• A) understatements of assets and income are a greater concern than overstatements.
• B) it doesn't matter if income is understated, because the savings on income tax offsets the reduced revenue, so net income is correct.
• C) the unrecorded sales cause a reduction of accounts receivable; therefore, the ratios of the two financial statements will not be misleading.
• D) overstatements of assets and income are a greater concern than understatements.

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Definitions:

Job Feedback

The process of giving employees information regarding their performance, which can be positive or constructive, aimed at improving their future performance.

Reprimand

A formal expression of disapproval or correction, often by a person in authority, towards an individual's behavior or performance.

Expectancy Model

A psychological theory stating that motivation is determined by an individual's expected outcomes or rewards following certain behaviors.

Second-level Outcome

The indirect or subsequent effects or results that follow the immediate consequences of an action or decision.