An auditor most likely would limit substantive audit tests of sales transactions when control risk is assessed as low for the occurrence assertion concerning sales transactions and the auditor has already gathered evidence supporting:

Question

Quizplus · Accepted Answer

Choice "B" is correct. Examination of accounts receivable and cash receipts provides the auditor with evidence with respect to both the completeness and the occurrence of sales transactions, thus limiting the need to test sales transactions. Choice "A" is incorrect. Examination of beginning and ending inventory balances may provide limited evidence of the occurrence of purchases and the cost of goods sold, but not of sales. Choice "C" is incorrect. Examination of shipping and receiving activities would not necessarily reduce the testing of sales transactions. Choice "D" is incorrect. Cutoffs of sales and purchases provides evidence regarding the sales occurring close to year-end, not necessarily all sales for the year.

An Auditor Most Likely Would Limit Substantive Audit Tests of Sales