Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

For which of the following audit tests would an auditor most likely use attribute sampling?

Testing whether purchase orders are properly authorized

Calculating the allowance for doubtful accounts

Estimating the total dollar amount of inventory

Determining the fair value of investment securities

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Verified step by step guidance

Understand the concept of attribute sampling: Attribute sampling is a statistical sampling method used to test whether a specific control or attribute is present or functioning as intended. It is commonly used in compliance testing, such as verifying whether procedures or controls are being followed.

Identify the nature of each audit test in the options provided: Attribute sampling is most applicable to tests that involve yes/no or pass/fail criteria, such as verifying whether a control (e.g., authorization of purchase orders) is in place. Other options, such as calculating allowances or estimating dollar amounts, involve substantive testing rather than attribute sampling.

Analyze the first option: Testing whether purchase orders are properly authorized involves checking whether a control (authorization) is present. This is a yes/no question, making it suitable for attribute sampling.

Analyze the other options: Calculating the allowance for doubtful accounts, estimating the total dollar amount of inventory, and determining the fair value of investment securities involve quantitative measurements and estimations. These require substantive testing, not attribute sampling.

Conclude that the most appropriate audit test for attribute sampling is 'Testing whether purchase orders are properly authorized,' as it involves verifying the presence of a control through a yes/no evaluation.