Substantive Procedures to Examine the Cutoff Assertion for Accounts Payable

question 6

Multiple Choice

Substantive procedures to examine the cutoff assertion for accounts payable include:

• A)selecting a sample of vouchers and agreeing them to authorized purchase orders.
• B)selecting a sample of vouchers and agreeing them to the purchases journal.
• C)selecting a sample of receiving reports around year-end and comparing dates on related vouchers to dates in the purchases journal.
• D)recomputing the mathematical accuracy of a sample of vendor invoices.

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Definitions:

Payback Period

An alternative metric to calculate the duration required for an investment to recoup its initial costs, measuring the risk and efficiency of the investment.

Initial Cost

The initial expenditure required to acquire an asset or to start a project, including purchase price and any associated set-up fees.

Investment

Allocation of resources, usually money, in order to generate income or profit.

Cash Flows

The total amount of money being transferred into and out of a business, especially regarding liquidity.