Which of the Following Audit Procedures Would Normally Be Best

question 73

Multiple Choice

Which of the following audit procedures would normally be best expected to test the completeness objective (assertion) for sales?

• A) Compare shipping documents with sales records.
• B) Apply gross profit rates to inventory disposed of during the period.
• C) Trace payments received subsequent to the balance sheet date.
• D) Send accounts receivable confirmation requests.

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Definitions:

Constant Returns To Scale

A situation in which increasing all inputs by a certain factor leads to an increase in output by the same factor, indicating proportionate scaling in production.

Production

This refers to the process of creating goods and services through the combination of labor, materials, and technology.

Cost

The monetary value required to produce or acquire goods or services.

Competitive Firm

An individual company operating in a competitive market, where it has little to no control over the market price of its goods or services, and must accept the market price as given.