The Auditors Compare Information on Canceled Checks with Information Contained

question 67

Multiple Choice

The auditors compare information on canceled checks with information contained in the cash disbursement journal.The objective of this test is to determine that:

• A)Recorded cash disbursement transactions are properly authorized.
• B)Proper cash purchase discounts have been recorded.
• C)Cash disbursements are for goods and services actually received.
• D)No discrepancies exist between the data on the checks and the data in the journal.

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Definitions:

Work in Process

Partially finished goods undergoing manufacture, situated between raw materials and finished products in accounting and inventory.

Direct Materials

Basic substances that can be directly linked to and are essential for the creation of the final product during the manufacturing sequence.

Controlling Account

An account in the general ledger that summarizes the detail contained in a subsidiary ledger.

Cost Ledger

A ledger that keeps track of the costs of production, including direct materials, direct labor, and manufacturing overhead.