The Auditor Would Like to Design a Test of Control

question 57

Multiple Choice

The auditor would like to design a test of control to test that statements are mailed to all customers each month.Which of the following typical tests of controls would be suitable?

• A)Inquire about who is responsible for mailing the statements.
• B)Find out whether customers pay by statement or by invoice.
• C)Reconcile subsequent payments to particular invoices.
• D)Match remittance advices from customers to customer statements.

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Definitions:

Common Shares

Equity securities that represent ownership in a corporation, providing voting rights and the potential for dividends.

Fair Value Through Profit or Loss

A financial accounting method where changes in fair value of an asset or liability are reflected in the profit or loss as they occur.

Balance Sheet

A financial statement that shows a company’s assets, liabilities, and shareholders' equity at a specific point in time, providing a basis for computing rates of return and evaluating its capital structure.

Significant Influence

The power to participate in the financial and operating policy decisions of another entity, often reflected by ownership of 20% to 50% of the voting stock.