Directional Testing Involves Testing Transactions or Balances Primarily for Which

question 21

Multiple Choice

Directional testing involves testing transactions or balances primarily for which type of error?

• A)overstatement
• B)understatement
• C)either overstatement or understatement
• D)neither overstatement nor understatement

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Definitions:

Increase

An upward change or rise in number, amount, value, or degree.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services already provided but not yet paid for.

Free Cash Flow

The amount of cash a company generates after accounting for capital expenditures, indicating the financial health and liquidity of a company.

Operations

The day-to-day activities necessary for a business to function, including production, sales, and administration.