In the sales and collection cycle, the results of the tests of controls determine:
A) whether positive or negative confirmations should be used for this engagement.
B) whether assessed control risk for sales and cash receipts needs to be revised.
C) if tests of details of balances need to be performed.
D) the extent to which planned detection risk is satisfied or each accounts receivable objective.

Question

Quizplus · Accepted Answer

The results of tests of controls in the sales and collection cycle determine whether assessed control risk for sales and cash receipts needs to be revised. This could impact the overall audit strategy, including the extent to which substantive tests, such as tests of details of balances, need to be performed. The other options are not directly related to the results of tests of controls in this cycle.

In the Sales and Collection Cycle, the Results of the Tests