Which of the Following Procedures Would an Auditor Most Likely

question 20

Multiple Choice

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

• A) Reconcile receiving reports with related cash payments made just prior to year-end.
• B) Contrast the ratio of accounts payable to purchases with the prior year's ratio.
• C) Vouch a sample of creditor balances to supporting invoices, receiving reports and purchase orders.
• D) Compare cash payments occurring after the balance sheet date with the accounts payable trial balance.

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Definitions:

Labor Hours

The total number of hours worked by employees during a certain period, often used to measure productivity.

Inventory Holding Cost

Inventory holding cost refers to the total expenses associated with storing unsold goods, including warehousing, insurance, depreciation, spoilage, and opportunity costs.

Marginal Subcontracting Cost

The additional cost incurred for producing one more unit of a product through subcontracting.

Layoff Cost

The financial charges incurred by a company when it has to terminate employees, which can include severance pay, benefits continuation, and other related expenses.