A Substantive Tests of Transactions for Acquisitions That Would Be

question 48

Multiple Choice

A substantive tests of transactions for acquisitions that would be used to provide evidence regarding the occurrence assertion would be to

• A)compare the classification with the chart of accounts by referring to vendors' invoices.
• B)recompute the clerical accuracy on the vendors' invoice.
• C)review the acquisitions journal for large or unusual amounts.
• D)trace from a file of receiving reports to the acquisition journal.

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Definitions:

Horizontal Analysis

A method of financial analysis in which financial statements figures for a period are compared to those of the previous period to determine the changes in dollar amounts and percentages.

Liquidity Ratios

Financial metrics used to measure a company's ability to pay off its short-term liabilities with its short-term assets.

Dollar Amount Changes

Alterations in financial figures, reflecting increases or decreases in values such as revenues, expenses, assets, or liabilities over a period.

Fixed Assets

Long-term tangible assets used in the operation of a business that are not expected to be converted into cash within a year.