The Auditor Would Like to Design a Test of Control

question 12

Multiple Choice

The auditor would like to design a test of control to test that unit selling prices are obtained from the price list master file of approved prices.Which of the following typical tests of controls would be suitable?

• A)Compare prices used on sales invoices to the authorized customer purchase order.
• B)Review changes to the price file throughout the year for proper authorizations and trace prices to copies of sales invoices.
• C)Use analytical review to compare total sales last year to total sales this year.
• D)Discuss the process used to authorize sales prices with the sales manager and the controller.

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Definitions:

Total Logistics Cost

The combined expenses associated with planning, implementing, and controlling the efficient flow and storage of goods, services, and information from the point of origin to the point of consumption.

Stockouts

Occur when an item is not in stock and unavailable for sale at the moment, potentially causing lost sales and customer dissatisfaction.

New-Product Development

The process of designing, creating, and bringing a new product or service to the market.

Cross-Docking

A logistics procedure where products received at a warehouse or distribution center are not stored but instead directly transferred from one truck to another, minimizing storage time and costs.