Describe the Five Types of Audit Tests

question 15

Essay

Describe the five types of audit tests. Identify which of the five types are substantive tests, and which are used to reduce assessed control risk.

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Definitions:

Operating Cycle

The average time period between purchasing goods for inventory and receiving cash from selling those goods.

Accounts Receivables

Sums due to a company from its customers for products or services rendered but not yet compensated for.

Investing Activity

Operations concerning the buying and selling of long-term assets and other financial investments that do not qualify as cash equivalents.

Suppliers

Entities or individuals that provide goods or services to another entity or individual, usually in a business-to-business context.