In Order to Efficiently Test the Purchases/accounts Payable Cut-Off, an Auditor

question 40

Multiple Choice

In order to efficiently test the purchases/accounts payable cut-off, an auditor will be most likely to:

• A)compare cut-off reports with purchase orders.
• B)coordinate cut-off tests with physical inventory observation.
• C)coordinate mailing of confirmations with cut-off tests.
• D)compare vendors' invoices with vendors' statements.

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Definitions:

Collection Float

The time period between when a check is deposited into a bank account and when the amount is made available.

Cheques

Written, dated, and signed instruments that direct a bank to pay a specific sum of money to the bearer or a specified person.

Deposits

Funds placed into an account at a banking institution for safekeeping, which can include money market accounts, savings accounts, and certificates of deposit.

Outstanding

Refers to shares that are currently held by investors, including both public shareholders and restricted company shares.