Smith Corporation Has Numerous Customers

question 49

Multiple Choice

Smith Corporation has numerous customers.A customer file is kept on disk storage.Each account in the customer file contains name,address,credit limit,and account balance.The auditor wishes to test this file to determine whether credit limits are being exceeded.The best procedure for the auditor to follow would be to:

• A)Develop test data that would cause some account balance to exceed the credit limit and determine if the system properly detects such situations.
• B)Develop a program to compare credit limits with account balances and print out the details of any account with a balance exceeding its credit limit.
• C)Require a printout of all account balances so they can be manually checked against the credit limits.
• D)Request a printout of a sample of account balances so they can be individually checked against the credit limits.

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Definitions:

Business Checks

Checks written from a business account, used to pay for goods, services, or other business-related expenses.

Disbursements

The payment of money from a fund or account, usually referring to the distribution of funds for specific purposes or expenses.

Cashier's Check

A check issued by a bank, drawn from its own funds and signed by a cashier or teller, guaranteeing payment to the payee.

Telephone Consumer Protection Act

A law enacted in 1991 in the United States that restricts telemarketing and the use of automated telephone equipment.