The Auditor Decided to Test Accounts Payable by Sending Open-Ended

question 30

Multiple Choice

The auditor decided to test accounts payable by sending open-ended (blank) confirmations to selected vendors. The auditor's best approach in selecting the vendor accounts to confirm is to

• A)select vendor accounts with large balances.
• B)select vendor accounts at random in order to apply a statistical sampling procedure.
• C)select vendor accounts based on the number of purchases from vendors during the year.
• D)select vendor accounts that are past due.

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Definitions:

Maximize Profit

The primary goal of businesses to achieve the highest possible profit margin by optimizing revenue while minimizing costs.

Fixed Costs

Costs that do not vary with the level of production or sales, including rent, salaries, and insurance premiums, providing stability in budgeting and planning.

Value-based Pricing

A pricing strategy where the price is set based on the perceived value to the customer rather than based on the cost of the product or historical prices.

Economic Value

The measure of the benefit provided by a good or service to an economic agent.