Which of the Following Might an Auditor Do in Testing

question 45

Multiple Choice

Which of the following might an auditor do in testing for the existence of accounts payable?

• A)Review client's financial statement disclosure.
• B)Review long-term purchase commitments.
• C)Perform a cutoff test of purchases and cash disbursements.
• D)Perform analytical review of related expense accounts.

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Definitions:

Indirect Method

A technique used in cash flow statements to adjust net income for changes in non-cash operating activities to calculate net cash provided by operating activities.

Operating Activities

Activities directly related to the daily business operations, including cash inflows and outflows from selling products and services.

Merchandise

Merchandise refers to goods or products that are purchased for resale by retail or wholesale traders, forming the primary inventory in their business operations.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments, not including cash equivalents.