A CPA Learns That His Client Has Paid a Vendor

question 35

Multiple Choice

A CPA learns that his client has paid a vendor twice for the same shipment,once based upon the original invoice and once based upon the monthly statement.A control procedure that should have prevented this duplicate payment is

• A)attachment of the receiving report to the disbursement report.
• B)prenumbering of disbursement vouchers.
• C)use of a limit or reasonableness test.
• D)prenumbering of receiving reports.

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Definitions:

Opportunity Cost

The financial implication of not selecting the following best possibility when faced with a decision.

Interest

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, paid by borrowers to lenders.

Savings Account

A deposit account held at a bank or other financial institution providing principal security and a modest interest rate.

Opportunity Cost

The deficit of potential benefits that could be reaped from alternative options when one is picked.