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:

Receivables

Receivables refer to the funds that a company is entitled to receive from customers for goods or services delivered or agreed upon.

§ 179 Expense

This refers to a U.S. tax code provision allowing businesses to deduct the full purchase price of qualifying equipment or software within the tax year, aimed at encouraging business investment and growth.

Separately Stated Items

Tax items stated separately on the K-1 form from a partnership or S corporation, allowing for proper reporting and treatment on individual returns.

Ordinary Income

Income earned from standard operations of business or through wages, as opposed to capital gains or dividend income.