Which of the Following Procedures Would an Auditor Most Likely

question 4

Multiple Choice

Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities?

• A)Trace a sample of accounts payable entries recorded just before year-end to the unmatched receiving report file.
• B)Compare a sample of purchase orders issued just after year-end with the year-end accounts payable trial balance.
• C)Vouch a sample of cash disbursements recorded just after year-end to receiving reports and vendor invoices.
• D)Scan the cash disbursements entries recorded just before year-end for indications of unusual transactions.

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Definitions:

Liquidation Transactions

Financial activities involved in dissolving a business, including selling off assets to pay creditors and distributing remaining funds to shareholders.

Profit and Loss Ratio

A financial metric that compares the profit earned and losses incurred by a business over a specific period, usually used to ascertain operational efficiency.

Safe Payments

Transactions processed securely, minimizing the risk of fraud or theft of payment information.