An Auditor Selects a Sample from the File of Shipping

question 40

Multiple Choice

An auditor selects a sample from the file of shipping documents to determine whether invoices were prepared. This test is performed to assess the assertion of

• A) Authorization and accuracy.
• B) Completeness.
• C) Cutoff.
• D) Occurrence.

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Definitions:

Rival Good

A type of good that cannot be consumed by more than one person at the same time, because its consumption by one person reduces its availability for others.

Marginal External Cost

The additional cost to society that arises from one more unit of a good being produced, not considered by the producer.

Optimal Fee

The best possible charge for a service or product that maximizes profit without discouraging consumers from buying.

Profitability

The degree to which a business or activity yields profit or financial gain.