The Auditor Is Performing Substantive Tests of Balances for Accounts

question 35

Multiple Choice

The auditor is performing substantive tests of balances for accounts payable. What documentation would provide the best evidence for the ending balance?

• A) vendors' invoices
• B) vendors' statements
• C) receiving reports
• D) purchase orders

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Definitions:

Uncertainty

A situation characterized by the lack of predictability or definite knowledge about an outcome or result.

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Balance Sheet Hedge

A financial strategy used to reduce the risk of currency fluctuations affecting the value of assets and liabilities reported in a company's balance sheet.

Exchange Rate Fluctuations

Variations in the value of one currency relative to another, affecting international trade and investments.