The Auditor Is Most Likely to Verify the Liability Account

question 75

Multiple Choice

The auditor is most likely to verify the liability account 'accrued comissions payable' in conjunction with the:

• A)verification of contingent liabilities.
• B)review of sales transactions.
• C)examination of trade accounts payable.
• D)review of disbursements after year-end.

---

Definitions:

Monthly Interest Rate

The fraction of the annual interest rate divided by twelve, representing the interest for a single month.

Credit Policy

A credit policy is a set of guidelines that a company follows to determine the credit terms and conditions for its customers, including payment terms, credit limits, and how to manage delinquent accounts.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment or project, calculated by subtracting the present value of cash outflows from the present value of cash inflows over a period of time.

Credit Policies

Guidelines that set out the criteria for extending credit to customers, including terms of payment and interest rates.