When Making Audit Evidence Decisions

question 113

Multiple Choice

When making audit evidence decisions,

• A) the auditor decides which items in the population to test before determining the sample size.
• B) the sample size for any given procedure must remain constant from audit to audit.
• C) audit engagement software can assist the auditor in making evidence decisions.
• D) the auditor is required to use the sample sizes that are determined by the PCAOB.

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Definitions:

Sales Discounts

Reductions in the price of a product or service offered to incentivize prompt payment by the customer.

Sales Returns

Transactions in which customers return previously purchased merchandise, leading to a refund.

Operating Expenses

Costs associated with the day-to-day operations of a business, such as rent, utilities, and salaries, excluding direct production costs.

Perpetual Inventory System

An inventory accounting system that employs computerized point-of-sale systems and enterprise asset management software to instantly register the purchase or sale of inventory items.