Calculating the Turnover of Receivables Is Often Used in Testing

question 96

Multiple Choice

Calculating the turnover of receivables is often used in testing the sales cycle by auditors when performing which of the following?

• A)Trend analysis.
• B)Ratio analysis.
• C)Reasonableness testing.
• D)Nonstatistical sampling.

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Definitions:

Discount Rate

The discount rate applied to calculate the present value of future cash flows.

Automated Equipment

Machinery that operates with minimal human intervention, often used to increase efficiency and consistency in production.

Profitability Index

A financial metric that measures the return on investment for a project or investment relative to its cost.

Investment Projects

Initiatives undertaken by corporations or investors that involve significant capital outlay with the expectation of earning a return on investment over time.