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:

Human Being

A member of the species Homo sapiens, characterized by advanced cognitive abilities and complex social behaviors.

Authority

The power or right to give orders, make decisions, and enforce obedience.

Psychographic Studies

Research methods that examine consumers' lifestyles, interests, attitudes, and values to segment them for marketing purposes.

Personality

The combination of characteristics or qualities that form an individual's distinctive character, influencing their behaviors and interactions.