With Respect to the Purchasing Cycle, It Is Particularly Important

question 172

Multiple Choice

With respect to the purchasing cycle, it is particularly important for the auditor _______.

• A)to closely check the revenue and associated contra-revenue accounts
• B)to be knowledgeable about the entity, the types of sales the entity makes, and how those sales support the earnings generation of the entity
• C)to be knowledgeable about the entity, the types of purchases the entity makes, and how those purchases support the earnings generation of the entity
• D)to determine the net realizable value of accounts receivable

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Definitions:

Statute of Frauds

A legal principle that requires certain types of contracts to be executed in writing and signed by the party to be charged.

Promissory Estoppel

The legal enforcement of an otherwise unenforceable contract due to a party’s detrimental reliance on the contract.

English Rule

A legal principle where the losing party in a lawsuit is required to pay the winning party's legal costs.

American Rule

A legal principle stating that each party in a lawsuit typically pays their own attorney's fees, regardless of who wins.