Which of the Following Is a Substantive Test That an Auditor

question 61

Multiple Choice

Which of the following is a substantive test that an auditor most likely would perform to verify the existence and valuation of recorded accounts payable?

• A)Investigating the open purchase order file to ascertain that prenumbered purchase orders are used and accounted for.
• B)Receiving the client's unopened mail for a reasonable period of time after year-end to search for unrecorded vendor's invoices.
• C)Vouching selected entries in the accounts payable subsidiary ledger to purchase orders and receiving reports.
• D)Confirming accounts payable balances with known vendors and suppliers who have zero balances at year-end.

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Definitions:

Actual Authority

The explicit power granted by a principal to an agent to conduct specific transactions or activities on the principal's behalf.

Price Fixing

An illegal agreement among competitors to set, raise, or stabilize prices or competitive terms.

Criminally Liable

The legal responsibility one holds for committing a crime, subjecting them to criminal prosecution and penalties.

Vicarious Liability

A legal principle where an individual or entity is held responsible for the actions or omissions of another person, typically in employment situations.