An Auditor Learns That His Client Has Paid a Vendor

question 52

Multiple Choice

An auditor learns that his client has paid a vendor twice for the same shipment,once based upon the original invoice and once based upon the monthly statement.A control procedure that should have prevented this duplicate payment is

• A)attachment of the receiving report to the invoice only.
• B)prenumbering of disbursement vouchers.
• C)use of a limit or reasonableness test.
• D)prenumbering of receiving reports.

---

Definitions:

Adjust Unearned Revenue Account

The process of recognizing revenue that was received in advance as it is earned based on the delivery of goods or services.

Financial Statements

Written records that convey the business activities and the financial performance of a company, including the balance sheet, income statement, and cash flow statement.

Liabilities

Debts or financial responsibilities a business has to people or entities outside of it.

Increase Net Income

Actions or strategies aimed at raising the amount of profits a company keeps after deducting all expenses, taxes, and costs.