In a financial report audit, which of the following procedures is a substantive test of transactions?
A)Testing for evidence of approval of invoices.
B)Testing recorded sales with supporting delivery dockets.
C)Confirming debtors' accounts.
D)Comparing this year's balance with the previous year.

Question

Quizplus · Accepted Answer

Substantive tests of transactions involve testing the validity and accuracy of individual transactions. Testing recorded sales with supporting delivery dockets is an example of such a test, as it verifies that the sale actually occurred and the goods were delivered, thus providing evidence of the accuracy of the transaction. Testing for evidence of approval of invoices is an example of a test of controls, and confirming debtors' accounts and comparing this year's balance with the previous year are examples of analytical procedures.

In a Financial Report Audit, Which of the Following Procedures