An Audit Client Erroneously Recorded a Large Purchase Twice

question 4

Multiple Choice

An audit client erroneously recorded a large purchase twice.Which of the following tests of control would be most likely to detect this error in a timely and efficient manner?

• A)Reconciling suppliers' monthly statements with subsidiary payable ledger accounts.
• B)Footing the purchases journal.
• C)Sending written quarterly confirmations to all suppliers.
• D)Tracing totals from the purchases journal to the ledger accounts.

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Definitions:

Break-even Selling Price

The price at which a product must be sold to cover all associated costs of production without making a profit or a loss.

Discounted Price

The final price of a product after applying a discount to its original price.

Operating Expenses

The costs associated with running the day-to-day operations of a business, excluding the costs of goods sold.

Profit

The financial gain made in a transaction, calculated by subtracting the total costs from the total revenue.