An Auditor Most Likely Would Limit Substantive Tests of Sales

question 6

Multiple Choice

An auditor most likely would limit substantive tests of sales transactions when control risk is assessed as low for the existence or occurrence assertions concerning sales transactions and the auditor has already gathered evidence supporting

• A) Opening and closing inventory balances.
• B) Cash receipts and accounts receivable.
• C) Shipping and receiving activities.
• D) Cutoffs of sales and purchases.

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Definitions:

Production

The process of creating, manufacturing, or enhancing goods and services.

Distribution

In business, distribution refers to the process of getting a product or service from the manufacturer or service provider to the end consumer.

Junk Bond

A high-yield bond with a lower credit rating, reflecting a higher risk of default but offering potentially greater returns.

High-Risk Bond

A bond with a lower credit rating, indicating a higher risk of default, but offering higher potential returns to compensate for this risk.