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:

Present

Current time or the moment that is happening now.

Future Extraction

Strategic planning for the removal or usage of natural resources, regarding supply and demand, technological advancements, and environmental impacts.

Total Allowable Catch

The maximum quantity of a particular fish species that can be caught within a specified area and time frame to prevent overfishing.

Individual Transferable Quota

A system in resource management where individuals or companies are allocated a certain amount of a resource and can buy, sell, or trade parts of that quota.