Which of the Following Is a Substantive Procedure That an Auditor

question 39

Multiple Choice

Which of the following is a substantive procedure that an auditor most likely would perform to verify the existence of recorded accounts payable?

• A)Investigating the open purchase order file to ascertain that prenumbered purchase orders are used and accounted for.
• B)Receiving the entity's mail, unopened, for a reasonable period of time after the year-end to search for unrecorded vendor's invoices.
• C)Vouching selected entries in the accounts payable subsidiary ledger to purchase orders and receiving reports.
• D)Confirming accounts payable balances with known suppliers who have zero balances.

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Definitions:

Excess Reserves

Banking reserves exceeding the reserve requirement set by a central bank, not lent out to the bank's clients.

Interest Rate

The fee, shown as a percent of the original amount, that a borrower must pay to a lender to borrow money or other resources.

Sub-prime Housing Loan

A type of loan that is offered at a rate above prime to individuals who do not qualify for prime rate loans, often due to a poor credit history.

Prime Rate

The Prime Rate is the interest rate that commercial banks charge their most credit-worthy customers, often used as a benchmark in setting rates for various types of loans.