The Test of Details of Balances Procedure to "Examine Vendors

question 118

Multiple Choice

The test of details of balances procedure to "examine vendors' invoices of closely related accounts such as repairs to uncover items that should be property, plant, and equipment" satisfies the audit objective of

• A) completeness.
• B) detail tie-in.
• C) cutoff.
• D) existence.

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Definitions:

External Costs

Costs of a transaction or activity that affect parties who did not choose to incur that cost and are not reflected in market prices, often necessitating government intervention.

External Benefits

The positive effects of a transaction or an activity on an uninvolved third party or the society at large, which are not reflected in the market prices.

Externality

An economic term describing an indirect effect of a transaction not reflected in the market price, affecting third parties who did not choose to be involved.

Hydroelectric Power

Energy generated by converting the energy of falling or flowing water into electricity, commonly through the use of dams.