Since the Audit of Accounts Payable Generally Takes a Considerable

question 41

Multiple Choice

Since the audit of accounts payable generally takes a considerable amount of audit time,effective and properly tested internal controls can significantly reduce audit costs by reducing

• A)tests of controls.
• B)confirmations.
• C)tests of details of balances.
• D)analytical procedures.

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Definitions:

Common Size Income Statement

An income statement in which each line item is expressed as a percentage of sales revenue, facilitating comparison across companies or periods.

Percent of Assets

A measure or indicator expressed as a percentage of a company's total assets.

Interest Coverage Ratio

A financial metric used to determine how easily a company can pay interest on outstanding debt with its current earnings before interest and taxes.

Debt Ratio

A financial ratio that measures the proportion of a company's total debt to its total assets.