A Client Has a Separate Sales Group for Its Largest

question 71

Multiple Choice

A client has a separate sales group for its largest "preferred" customers. This is a select group of customers that normally make purchases in excess of $250,000 and often have accounts receivable balances in excess of $1 million. Which of the following audit procedures would the auditor most likely perform?

• A)Prepare a schedule of purchases and payments for these customers.
• B)Send out negative confirmations on a large sample of these customers.
• C)Inquire of the sales manager regarding the accounts receivable terms.
• D)Send out positive confirmations on a large sample of these customers.

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Definitions:

Measures of Activity

Quantitative techniques or metrics used to assess the level of activity or operations within a business or process.

Cost Formulas

Equations used to calculate and anticipate the costs associated with manufacturing a product or providing a service, often considering variables such as materials, labor, and overhead.

Performance Reports

Documents that compare budgeted or planned performance against actual performance.

Spending Variance

The difference between the actual amount spent and the budgeted amount, often analyzed in budgeting and cost management.