An Example of Substantive Testing and Also a Test of Controls

question 63

True/False

An example of substantive testing and also a test of controls is using audit software to identify purchases where the vendor's invoice, the receiving report, and the purchase order did not match prior to payment of the vendor's invoice.

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Definitions:

Cyclical Variation

Fluctuations in statistical or economic data that occur periodically over cycles, such as those caused by the business cycle.

Economic Recession

A period of temporary economic decline during which trade and industrial activities are reduced, generally identified by a fall in GDP in two successive quarters.

Inflation

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Random Variation

The variability in data that arises due to chance and cannot be attributed to any specific cause or pattern.