For Which of the Following Audit Tests Would an Auditor

question 85

Multiple Choice

For which of the following audit tests would an auditor most likely use attributes sampling?

• A)Making an independent estimate of the amount of a LIFO inventory.
• B)Examining invoices in support of the valuation of fixed asset additions.
• C)Selecting accounts receivable for confirmation of account balances.
• D)Inspecting employee time cards for proper approval by supervisors.

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Definitions:

Nominal Incomes

The amount of money earned by individuals or entities, not adjusted for inflation, expressed in current dollars.

Real Income

The purchasing power of an individual's or household's income, adjusted for inflation, indicating the quantity of goods and services that can be purchased.

Fisher Effect

describes the relationship between nominal interest rates, real interest rates, and inflation, stating that the nominal interest rate is equal to the sum of the real interest rate and the expected inflation rate.

Monetary Neutrality

The concept that changes in the money supply only affect nominal variables and have no long-term impact on real variables like output or employment.