When Testing the Controls for the Completeness Transaction-Related Audit Objectives

question 39

Multiple Choice

When testing the controls for the completeness transaction-related audit objectives,

• A) failure to record the acquisition of goods or services will generally understate net income.
• B) failure to record the acquisition of goods or services has no impact on the balance sheet.
• C) it is generally easy for the auditor to determine whether unrecorded transactions exist.
• D) the audit time for accounts payable can be reduced if the client has effective internal controls and the auditor properly tests those controls.

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Definitions:

Interest-on-Interest

Earnings on the reinvestment of previous interest payments on fixed income investments or savings.

Reinvested

The process of using earned profits or dividends to purchase additional shares or assets, rather than distributing them as dividends.

Investment

Allocation of resources, such as time, money, or effort, in hope of future benefits or returns.

Future Value

The eventual worth of an asset or cash that matches the value of a predetermined present sum.