The Auditor Selects 25 Invoices for Testing and Detects No

question 57

Multiple Choice

The auditor selects 25 invoices for testing and detects no errors. As a result, she concludes that the expense account is fairly stated. Unbeknown to the auditor, the client has altered some of the invoices to reduce the amount reported as expense. This is an example of:

• A) an efficiency problem.
• B) incorrect acceptance.
• C) a sampling error.
• D) Both b and c.

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Definitions:

Petty Cash Transactions

Small purchases or expenditures paid using a readily available cash fund.

Cash Over and Short

An account that reports the discrepancies between the physical count of cash and the recorded amounts in a business's financial records.

Internal Control Procedures

Systems and policies put in place by a company to ensure the accuracy and integrity of financial and accounting information, prevent fraud, and comply with laws.

Cash Receipts

Money received by a business during a set accounting period, including revenue from sales, interest, dividends, and other cash inflows.