Final answer:
The auditor tests the authorization assertion when comparing sales invoices with the approved price list. This test verifies that sales transactions have been approved by management and are valid.
Step-by-step explanation:
When comparing prices and terms on a sample of sales invoices with the authorized price list and terms of trade, the auditor is testing the authorization assertion. This test is designed to ensure that the sales prices and terms have been approved by management as per company policies and the authorized price list.
When an auditor performs this test, they are essentially verifying that each transaction has been properly authorized before being finalized, thus checking the validity of the sales transactions.