Controls Over the Recording of a Liability and the Specific

question 42

Multiple Choice

Controls over the recording of a liability and the specific audit objectives to which they can relate, include all of the following except:

• A) computer prepares a report of all goods received that have resulted in a voucher.
• B) computer agreement of the details of the voucher with the vendors' invoices and the related receiving reports and purchase orders.
• C) computer comparison of the receiving report date with the accounting period when the voucher is recorded.
• D) computer check of the mathematical accuracy of each voucher and supporting vendors' invoices.
• E) the supporting documents should be stamped, perforated, or otherwise canceled to prevent resubmission for duplicate payment.

Explain the significance of von Neumann-Morgenstern utility functions in the context of risky choices.

Calculate the expected value of a gamble and compare it with certain outcomes to make rational choices.

Analyze insurance decisions and the willingness to pay for risk mitigation.

Understand how utility functions can represent preferences towards risk and how they influence gambling decisions.

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Definitions:

Credit Sales

Sales made on credit, where the payment from the buyer is deferred to a later date.