With Respect to a Small Company's System of Purchasing Supplies

question 116

Multiple Choice

With respect to a small company's system of purchasing supplies, an auditor's primary concern should be to obtain satisfaction that supplies ordered and paid for have been

• A) requested by and approved by the same individual.
• B) used in the course of business and solely for business purposes during the year under audit.
• C) received, counted, and checked to quantities and amounts on purchase orders and invoices.
• D) properly recorded as assets and systematically amortized over the estimated useful life of the supplies.

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Definitions:

Competitive Price-Taker

A market participant who cannot influence the price on the market but instead must accept the prevailing market price.

Marginal Revenue

The additional income earned from selling one more unit of a good or service.

Competitive Price-Taker

A market participant who accepts the prevailing market prices as given because they have no power to influence those prices due to intense competition.

Marginal Cost

The increase in total cost that arises from producing one additional unit of a product or service.