As Part of Accounts Payable Testing, an Auditor Reviews Cash

question 2

Multiple Choice

As part of accounts payable testing, an auditor reviews cash payments made post balance date.This is done mainly to gain evidence about which assertion?

• A)Valuation and allocation.
• B)Rights and obligations.
• C)Completeness.
• D)Existence.

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Definitions:

Retained Earnings

The accumulated net income of a company that is retained by the company rather than distributed to shareholders as dividends.

Materials Price Variance

The difference between the actual cost of materials and the standard cost, multiplied by the quantity used.

Materials Quantity Variance

Represents the difference between the actual quantity of materials used in production and the standard quantity expected to be used, multiplied by the standard cost per unit.

Raw Materials

Unprocessed or primary substances used in manufacturing to create finished goods.