Which of the Following Areas Are Tested as Part of the Audit

question 15

Multiple Choice

Which of the following areas are tested as part of the audit of the acquisition and payment cycle?

• A) payment for raw materials, receipt of raw materials, shipment of goods to customers
• B) processing of sales orders, production of goods for clients, and subsequent invoicing
• C) processing supplier invoices, vendor master file changes, shipment of goods to customers
• D) processing purchase orders, vendor master file changes, receiving goods and services

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Definitions:

Retained Earnings

Accumulated net income left over for a company after it has paid out dividends to its shareholders.

Prior Period Adjustment

Adjustments made to the financial statements of a prior period to correct an error or to account for a retroactive application of new accounting policies.

Retained Earnings

The share of a company's earnings that are held back and not distributed as dividends to its shareholders.

Net Income

Net income is the total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue, indicating the company's financial performance.