The Parts of the Audit Most Affected by the Tests

question 78

Multiple Choice

The parts of the audit most affected by the tests of controls and substantive tests of transactions for the sales and collection cycle are the balances in:
1) accounts receivable.
2) cash.
3) bad debt expense.
4) provision for doubtful debts.

• A) 1, 3, 4
• B) 2, 3, 4
• C) 1, 2, 3
• D) 1, 2, 3, 4

---

Definitions:

Volume Of Activity

A term often used in cost accounting to denote the amount of production or the level of sales of a company during a specific period.

Total Variable Costs

The sum of all costs that vary with the level of production or sales, such as materials and labor.

Volume Of Activity

A term related to the level of business operations or transactions undertaken by a company within a specific period.

Variable Cost

Costs that change in proportion to the level of goods or services produced by a business.