Final answer:
The most significant effect of the results of tests of controls and substantive tests of transactions in the sales and collection cycle affects the confirmation of accounts receivable. Option c.
Step-by-step explanation:
The most significant effect of the results of the tests of controls and substantive tests of transactions in the sales and collection cycle is on C) the confirmation of accounts receivable. When auditors conduct tests of controls and substantive tests of transactions, they're assessing the effectiveness of a company's internal controls over sales and cash collections, as well as verifying the existence, accuracy, and completeness of the transactions recorded.
If controls are strong and transaction testing does not reveal any material misstatements, auditors may decide to perform fewer detailed tests, such as confirmations. However, if the tests indicate potential weaknesses or errors, more extensive testing, including confirmation of accounts receivable balances, may be necessary to gain assurance about the receivables' existence and accuracy. Strong controls and accurate transaction testing may reduce the need for extensive testing, while potential weaknesses may necessitate increased efforts in confirming receivable balances.