In Most Credit Sales Audits, the Auditor's Concern Over Sales

question 15

Multiple Choice

In most credit sales audits, the auditor's concern over sales adjustment transactions is based upon the:

• A) sheer number and value of these transactions.
• B) lack of proper authorisation for these transactions.
• C) potential use of these transactions to conceal a theft of cash.
• D) poor controls normally found over these transactions and the inherent lack of documentation.

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Definitions:

Taxable Event

A financial transaction that may result in taxes owing to the government.

Short-term Capital Gain

A profit realized from the sale of an asset held for less than a year, often taxed at a different rate than long-term capital gains.

Long-term Capital Gain

Profit from the sale of an asset held for more than a year, typically subject to a lower tax rate.

Mutual Fund Prospectus

A legal document provided by mutual funds to potential investors, detailing the fund's objectives, risks, performance, and expenses.