A Client's Purchasing System Ends with the Recording of a Liability

question 101

Multiple Choice

A client's purchasing system ends with the recording of a liability and its eventual payment. Which of the following best describes auditors' primary concern with respect to liabilities resulting from the purchasing system?

• A)Accounts payable are not materially understated.
• B)Authority to incur liabilities is restricted to one designated person.
• C)Acquisition of materials is not made from one vendor or one group of vendors.
• D)Commitments for all purchases are made only after established competitive bidding procedures are followed.

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Definitions:

Phantom Limb

A phenomenon in which individuals experience sensations, including pain, in a limb that has been amputated.

Clairvoyance

The supposed ability to gain information about an object, person, location, or physical event through extrasensory perception.

Psychokinesis

The purported psychic ability to move or manipulate objects with the mind without physical interaction, widely regarded as pseudoscience.

Precognition

The psychic ability to know or predict events before they happen, considered a paranormal phenomenon.