If the objective of a test of detail of transaction is to detect overstatement of sales, the auditor’s direction of testing should be from: * A. Cash receipts journal to sales journal B. Sales journal to cash receipt journal C. Source documents to accounting records D. Accounting records to source documents E. None of the above
Choose the one correct answer
3. If the objective of a test of detail of transaction is to detect overstatement of sales, the auditor’s direction of testing should be from: *
A. Cash receipts journal to sales journal
B. Sales journal to cash receipt journal
C. Source documents to accounting records
D. Accounting records to source documents
E. None of the above
5. The following statements relate to nature of positive and negative confirmation requests. Which statement is true? *
A. In positive confirmation, the customer is requested to reply directly to the client stating whether the balance appearing in the reply portion of the confirmation request is correct or not, and if not, to indicate details of difference.
B. In a negative confirmation, the customer is asked to sign a confirmation form showing the account balance and return it in a stamped, addressed enveloped that is enclosed
C. A positive confirmation request seeks a response from the debtor as to whether or not the balance is correct, and requests payment of the amount
D. In negative confirmation, the debtor is requested to reply only if he disagrees with the indicated balance and to note details of the disagreement.
E. None of the above
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