An Auditor Selects a Sample of Items Recorded and Traces

question 46

Multiple Choice

An auditor selects a sample of items recorded and traces them back to the supporting documentation.This is an example of which of the following?

• A)directional testing for existence.
• B)directional testing for completeness.
• C)direct testing for valuation.
• D)direct testing for rights.

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Definitions:

Invoice

A document issued by a seller to a buyer, detailing products or services provided, prices, and payment terms.

Markup

The amount added to the cost price of goods to cover overhead and profit, expressed as a percentage of the cost.

Gross Profit

The financial gain obtained after subtracting the cost of goods sold from the total revenue.

Net Profit

The amount of money remaining after all operating expenses, interest, taxes, and dividends have been deducted from total revenue.