Which of the Following Audit Procedures Is the Most Effective

question 69

Multiple Choice

Which of the following audit procedures is the most effective in testing sales for understatement?

• A)Analyze the aged trial balance of recorded accounts receivable.
• B)Confirm recorded accounts receivable.
• C)Trace a sample of shipping documents to sales invoices recorded in the sales journal.
• D)Vouch a sample of recorded sales from the sales journal to shipping documents.

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Definitions:

Total Revenue

The total amount of money received by a company for goods sold or services provided during a certain time period.

Monopoly Power

The ability of a single seller in a market to control prices and exclude competition, often leading to inefficiencies and consumer harm.

American Consumers

Individuals or households in the United States engaging in the consumption of goods and services.

Natural Monopoly

A market structure where a single firm can supply a good or service to an entire market at a lower cost than could two or more firms due to economies of scale.