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In class, we discussed the notion of an audit philosophy of tests of accounts for overstatement and understatement to gain audit efficiencies.Consider the following statements:

In class, we discussed the notion of an audit philosophy of

tests of accounts for overstatement and understatement to

gain audit efficiencies.Consider the following statements:

I.Testing Sales for UNDERstatement, conceptually, also tests Accounts receivable for UNDERstatement.

II. Assume that company management made the following journal

entry:Capital Asset (i.e. Building)XX

Repairs and Maintenance ExpenseXX

If the auditor tests the asset account for Overstatement, then

conceptually: Expenses are also tested for Overstatement.

a.I is true;II is true.

b.I is true;II is false.

c.I is false; II is true.

d.I is false; II is false.

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