The Purpose of the Audit Procedure to "Trace Receiving Reports

question 58

Multiple Choice

The purpose of the audit procedure to "trace receiving reports issued before year-end to related vendors' invoices" is to determine that all

• A)merchandise received is included in accounts payable.
• B)merchandise received is included in inventory.
• C)merchandise was received.
• D)invoices have been paid.

---

Definitions:

Amortization

A process of gradually writing off the initial cost of an asset over a period.

Interest Cost

Represents the total expense over the life of a borrowing, calculated as the difference between the amount borrowed and the amount repaid.

Service Cost

An expense recognized in the income statement of an employer for the cost of future pension benefits earned by employees during the current period.

Accrual-Basis Concepts

Accrual-basis concepts in accounting involve recording revenues when they are earned and expenses when they are incurred, regardless of when cash is received or paid.