The Results of a Generalized Audit Software Simulation of the Aging

question 4

Multiple Choice

The results of a generalized audit software simulation of the aging of accounts receivable revealed substantial differences in the aging contribution,even though grand totals reconciled.Which of the following should the IS auditor do first to resolve the discrepancy?

• A) Recreate the test, using different software.
• B) List a sample of actual data to verify the accuracy of the test program.
• C) Ignore the discrepancy because the grand totals reconcile and instruct the controller to correct program.
• D) Create test transactions and run test data on both the production and simulation program.

Understand the relationship between the returns required by investors and the firm's cost of capital components.

Recognize the significance of market values in calculating the cost of capital over book values.

Know the concept of target capital structure and its relevance to the WACC.

Learn how the marginal cost of capital (MCC) and investment opportunity schedule (IOS) guide capital budgeting decisions.

---

Definitions:

Important Choices

Decisions that have significant impacts on an individual's life or circumstances, often involving a degree of complexity and long-term consequences.

Environments

The surroundings or conditions in which a person, animal, or plant lives or operates, including natural, social, cultural, and built facets.

Special Adjustments

Modifications or changes made to financial statements or business strategies to address specific issues or to better reflect economic realities.

Geographical Adjustments

Adjustments made to policies, prices, or strategies based on the geographical location of markets or resources.