When Comparing Prices and Terms on a Sample of Sales

question 1

Multiple Choice

When comparing prices and terms on a sample of sales invoices with the authorized price list and terms of trade, the auditor is testing the ____________ assertion.

• A) Cutoff
• B) Authorization
• C) Occurrence
• D) Completeness

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Definitions:

Expected Value

In probability theory, it is the weighted average of all possible values of a random variable, with weights being the probabilities of each outcome.

Natural Log

The logarithm to the base e, where e is an irrational and transcendental constant approximately equal to 2.71828.

Risk Averter

An individual or entity that prefers to avoid risk, typically choosing options with more certain outcomes over those with higher, but more uncertain, returns.

Expected Value

A calculated average of the possible outcomes of a given event, weighted by the likelihood of each outcome occurring.