Which Type of Substantive Procedure Do Auditors Ordinarily Use When

question 5

Multiple Choice

Which type of substantive procedure do auditors ordinarily use when testing income statement accounts?

• A) confirmations
• B) recalculations
• C) analytical procedures
• D) observations

---

Definitions:

Net 45

A payment term indicating that the full amount is due for payment 45 days after the invoice date.

Sales Discount

A reduction in the price of a product or service offered to customers to encourage prompt payment.

FOB Shipping Point

A term used in shipping contracts to indicate that the buyer is responsible for the cost and risk of loss or damage once the goods are shipped by the seller.

Perpetual Inventory Method

A system that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.