When auditors must decide which type of test to select for obtaining sufficient appropriate evidence, the cost of obtaining the evidence is an important consideration. Rank the following types of tests in order of increasing cost: 1. Tests of controls
2) Substantive tests of transactions
3) Test of details of balances
4) Risk assessment procedures
5) Substantive analytical procedures
A) 1, 2, 3, 4, and 5
B) 2, 4, 3, 5, and 1
C) 5, 4, 1, 2, and 3
D) 5, 4, 3, 2, and 1

Question

Quizplus · Accepted Answer

Substantive analytical procedures and risk assessment procedures generally cost less because they involve high-level evaluations and assessments. Tests of controls and substantive tests of transactions are more detailed and thus more costly. Test of details of balances are usually the most expensive due to their detailed nature and the effort required to verify account balances.

When Auditors Must Decide Which Type of Test to Select