Final answer:
In the context of auditing, the population for tests of controls and transactions for sales includes all sales transactions during the audit period. The auditor selects a representative sample of these transactions to evaluate the accuracy and effectiveness of internal controls.
Step-by-step explanation:
When performing tests of controls and tests of transactions for sales, the auditor generally defines the population as all of the transactions that have taken place during the period being audited. This entire pool of transactions is what the auditor is interested in evaluating for accuracy and compliance with internal controls.
In a sales context, tests of controls are designed to evaluate the effectiveness of the controls in place to ensure sales transactions are recorded correctly and to prevent fraud or error. Tests of transactions are aimed at verifying the actual sales transactions recorded in the financial statements. Together, these tests help auditors decide whether the financial statements provide a fair representation of the company's financial position.
For example, if the auditor is examining the sales records of a company for the fiscal year, the population would include every sales transaction recorded in that year. The auditor would select a sample of these transactions to test, looking for evidence that they have been recorded accurately and in accordance with established policies and procedures—or any indications that they have not.
While it is not feasible to test each and every transaction due to time and resource constraints, a carefully selected sample that is representative of the entire population should give sufficient evidence to assess the controls and transaction accuracy during the final audit.