Which of the Following Is Least Likely to Be an Accurate

question 40

Multiple Choice

Which of the following is least likely to be an accurate statement concerning characteristics of an audit?

• A) An analysis of inventory turnover addresses whether the proper method of determining inventory costs-as contrasted to market values-is being applied.
• B) Characteristics of the double entry bookkeeping system make it possible to test for overstated sales when tests of accounts receivable are being performed.
• C) The direction of tests for overstatement errors is generally directed from the recorded entry to source documents.
• D) Use of a perpetual rather than a periodic inventory system is likely to affect the nature of cutoff errors made at year-end.

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Definitions:

RRSP

Registered Retirement Savings Plan, a Canadian account for holding savings and investment assets, with certain tax benefits.

Compounded Semi-annually

The technique of twice yearly adding interest to the initial sum of money and to the interest that has previously been compounded.

End-of-quarter Payments

Payments made at the end of each quarter in a financial year, often related to dividends, loans, or leases.

Compounded Monthly

A method of calculating interest where the interest amount is added to the principal balance each month, accelerating the growth of the investment.