Which of the Following Is a Procedure Used in an Audit

question 58

Multiple Choice

Which of the following is a procedure used in an audit where there is a heightened risk of fraud related to accounts payable and other related expense accounts?

• A)Send blank confirmations to vendors that ask them information about all outstanding invoices,payment terms,payment histories,and so forth.
• B)Scan journals for unusual or large year-end transactions and adjustments.
• C)Obtain and examine documentation for payments of invoices that are for amounts just under the limit that typically requires some level of approval.
• D)All the above.

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Definitions:

Perfect Price Discrimination

Perfect price discrimination occurs when a seller charges every consumer the maximum they are willing to pay, capturing the entire consumer surplus as profit.

Marginal Revenue

The additional revenue that a company gains by selling one more unit of a product or service.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded, typically downward sloping.

Intertemporal Price Discrimination

Practice of separating consumers with different demand functions into different groups by charging different prices at different points in time.