Which of the Following Is Not a Typical Audit Procedure

question 20

Multiple Choice

Which of the following is not a typical audit procedure performed as part of the out-of-period liability tests?

• A) Examine underlying documentation for cash disbursements made during the last month of the year.
• B) Examine underlying documentation for bills not paid several weeks after the year-end.
• C) Trace receiving reports issued before year-end to related vendors' invoices.
• D) All of the above are correct.

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Definitions:

Accounting Method

An accounting method is a set of rules that determine how and when income and expenses are recorded in the financial statements.

Investments

Assets purchased with the expectation that they will generate income or appreciate in the future.

Financial Statements

Formal records of the financial activities and position of a business, presenting its operations, financial condition, and cash flows.

Consolidated Financial Statements

Financial statements that show the aggregated financial position and results of operations for a parent company and its subsidiaries.