After making inquiries about credit granting policies, an auditor selects a sample of sales transactions and examines evidence of credit approval. This test of controls most likely supports management's financial statement assertion(s) of:

Question

Quizplus · Accepted Answer

Choice "C" is correct. By ensuring that credit approval is obtained before goods are shipped to customers, the auditor is testing management's assertion that accounts receivable are collectible (allocation and valuation). Ensuring that credit approval is obtained before goods are shipped does not support the rights and obligations assertion. Choices "A", "B", and "D" are incorrect, based on the above Explanation.

After Making Inquiries About Credit Granting Policies, an Auditor Selects