In Many Audits of Sales Transactions Substantive Tests of Transactions

question 137

Multiple Choice

In many audits of sales transactions substantive tests of transactions can be reduced in determining the completeness objective because

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

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Definitions:

Population Growth

The increase in the number of individuals in a population, due to factors like birth rates exceeding death rates.

Sociocultural Considerations

Aspects of social and cultural contexts that influence behaviors, practices, and policies, recognizing the impact of societal and cultural factors.

Economic Security

The condition of having stable income or other resources to support a standard of living now and in the foreseeable future.

Underemployment

A situation in which workers are employed in positions requiring less education and skill than they have.