Auditors Are Especially Concerned with Three Aspects of Internal Control

question 30

Multiple Choice

Auditors are especially concerned with three aspects of internal control for the sales and collection cycle. Which of the following is not one of their major concerns?

• A) controls over cutoff
• B) controls that prevent or detect embezzlements
• C) controls over sales discounts
• D) controls related to the allowance for uncollectible accounts

---

Definitions:

After-Tax Discount Rate

The rate of return or discount rate applied to cash flows after accounting for the tax impact, used in net present value calculations.

Incremental Sales

The additional sales generated from a specific marketing campaign, sales activity, or product change, beyond regular expected sales.

Straight-Line Depreciation

A technique for distributing the expense of a physical asset evenly across its lifespan.

After-Tax Discount Rate

After-tax discount rate is the rate used to determine the present value of future cash flows after considering the effects of taxes.