An auditor who uses a transaction cycle approach to assessing control risk most likely would test control activities related to transactions involving the sale of goods to customers with the:
A)Collection of receivables.
B)Purchase of merchandise inventory.
C)Payment of accounts payable.
D)Sale of long-term debt.

Question

Quizplus · Accepted Answer

The transaction cycle approach to assessing control risk involves examining the various activities within a specific cycle to identify and assess risks. When testing control activities related to transactions involving the sale of goods to customers, the collection of receivables is directly related because it is part of the revenue cycle. The collection process is a key control area to ensure that sales are accurately recorded and that receivables are properly managed and collected. The other options (B, C, D) relate to different transaction cycles (purchases and payments cycle, financing cycle) that are not directly involved in the sale of goods to customers.

An Auditor Who Uses a Transaction Cycle Approach to Assessing