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:

Biome

A large community of plants and animals that occupies a distinct region defined by its climate and vegetation types, such as forests, deserts, grasslands, and tundras.

Determining Factor

A critical element or condition that significantly influences the outcome or nature of a process, situation, or decision.

Desert Plants

Flora adapted to survive in harsh desert environments, typically exhibiting water conservation features.

Succulent Leaves

Thick, fleshy leaves adapted for water storage, commonly found in plants that inhabit dry environments or soil conditions.