The parts of the audit most affected by the tests of controls and substantive tests of transactions for the sales and collection cycle are the balances in:
1)accounts receivable.
2)cash.
3)bad debt expense.
4)provision for doubtful debts.
A) 1, 3, 4
B) 2, 3, 4
C) 1, 2, 3
D) 1, 2, 3, 4

Question

Quizplus · Accepted Answer

The sales and collection cycle involves the recording of sales, the receipt of cash, and the recording of bad debts. The tests of controls and substantive tests of transactions for this cycle will therefore affect the balances in accounts receivable, cash, bad debt expense, and provision for doubtful debts.

The Parts of the Audit Most Affected by the Tests