The Tests That an Auditor Uses to Gather Evidence Relating

question 95

Multiple Choice

The tests that an auditor uses to gather evidence relating to income statement transactions are

• A)substantive tests of balances
• B)tests of controls
• C)substantive tests of transactions
• D)substantive tests of accounts

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Definitions:

Machine Hours

A measure of the amount of time a machine is operated during a given period, used for allocating manufacturing costs to products or activities.

Bottleneck Process

A stage in a process that limits the total output because it has a lower capacity than other parts of the process.

Desired Profit

The target profit a company aims to achieve within a specific period, often used in pricing and business strategy.

Invested Assets

Assets that are purchased or acquired for the purpose of generating income or profit for the business.