The most significant effect of the results of the tests of controls and substantive tests of transactions in the sales and collection cycle is on
A) bad debt expense.
B) the analytical tests to be performed.
C) the confirmation of accounts receivable.
D) the impact of processing cash receipts.

Question

Quizplus · Accepted Answer

The results of tests of controls and substantive tests of transactions impact the confirmation of accounts receivable. This is because these tests assess the validity and accuracy of the transactions in the sales and collection cycle, which directly affect accounts receivable. As a result, the auditor's confirmation of accounts receivable will be based on the reliability of the underlying transactions.

The Most Significant Effect of the Results of the Tests