There Are Five General Types of Audit Tests

question 67

True/False

There are five general types of audit tests.

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Definitions:

Operating Cycle

The period it takes for a business to purchase inventory, sell products, and convert the sales back into cash, essentially measuring the time span from buying raw materials to receiving cash from sales.

Inventory Turnover Rate

A measure of how quickly a company sells and replaces its stock of goods within a given period, indicating the efficiency of its inventory management.

Opportunity Cost

The expense associated with foregoing the next most favorable option when a choice is made.