The Analytical Procedure That Requires the Auditor to "Inspect the List

question 49

Multiple Choice

The analytical procedure that requires the auditor to "inspect the list of accounts payable for unusual or non-vendor payables" would have the best chance of discovering which possible error?

• A)misstatement of accounts payable and expenses
• B)classification error for non-trade liabilities
• C)unrecorded accounts or misstatements
• D)invalid accounts or misstatements

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Definitions:

EAR

Effective Annual Rate, a measure of interest that takes into account the effect of compounding over a year.

Compounded Quarterly

The process whereby the interest earned on an investment is calculated and added to the principal sum every three months, then the new total is used for the next compounding period.

Compounded Annually

The process where the interest earned in one period is added to the principal, and then interest in the next period is calculated on the new total.

Annual Payments

Regular payments made once a year, often related to loans, annuities, or other financial instruments.