When Designing Tests of Controls and Substantive Tests of Transactions

question 116

Multiple Choice

When designing tests of controls and substantive tests of transactions for cash receipts,it is important to remember that

• A)the test of controls are designed to test for monetary misstatements.
• B)auditors use the same methodology for designing tests of controls and substantive tests of transactions for cash receipts as they use for sales.
• C)the tests of controls are not dependent on the controls the auditor identifies.
• D)the tests of controls is not dependent on whether the company being audited is publicly traded.

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Definitions:

Increasing Productive Capacity

The process or actions taken to enhance the capability of a company or economy to produce goods and services.

Monetary Policy

The process by which a central bank controls the money supply in the economy, usually with the goal of controlling inflation, interest rates, and stimulating economic growth.

Fiscal Policy

Fiscal policy involves government adjustments to its spending levels and tax rates to monitor and influence a nation's economy.

Treasury Securities

Debt securities issued by the U.S. Department of the Treasury to fund the government's spending activities, including bills, notes, and bonds.