Assessed Control Risk and Results of Substantive Tests of Transactions

question 104

Multiple Choice

Assessed control risk and results of substantive tests of transactions are normally unimportant for designing tests of details of balances for which of the following accounts?

• A) accounts receivable
• B) inventory
• C) accounts payable
• D) notes payable

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Definitions:

Inventory Purposes

The reasons for keeping stock of goods in a business, typically for sale, production, or avoiding stockouts.

Direct Costs

Expenses that can be directly traced to a product or service, such as materials and labor.

Inventory Costing Methods

Refers to the techniques used to determine the value of an inventory, including LIFO (Last In, First Out), FIFO (First In, First Out), and weighted average methods.

Consigned Merchandise

Goods that are sent by one party to another to sell, with payment to the consignor occurring only after the sale.