If the Objective of a Test of Details Is to Detect

question 34

Multiple Choice

If the objective of a test of details is to detect the overstatement of sales, the auditor should trace transactions from the:

• A)cash receipts journal to the sales journal.
• B)sales journal to the cash receipts journal.
• C)shipping documents to the accounting records.
• D)accounting records to the shipping documents.

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Definitions:

Direct Expenses

Costs that can be directly traced to the production of specific goods or services.

Investment Turnover

A measure that shows how frequently investment assets are bought and sold within a given period.

Cost Center

A department or unit within an organization that does not directly add to profit but still incurs costs, such as HR or IT department.

Service Departments

Units within a company that provide support services to other departments but do not directly generate revenue.