An Auditor Most Likely Would Limit Substantive Tests of Sales

question 1

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:

Governmental Fund Financial Statements

Financial reports that detail the financial position and results of operations for the government funds, embracing a diverse range of governmental activities and services.

Fund Financial Statements

Financial reports that detail the income, expenditures, and other financial activities of a particular fund within an organization.

Incremental Borrowing Rate

The interest rate a lessee would have to pay to borrow under a similar term, and with similar security, the funds necessary to obtain an asset lease.

Net Position

The difference between the total assets and total liabilities of an entity, representing its net worth or equity value.