The Auditor Decided to Test Accounts Payable by Sending Open-Ended

question 119

Multiple Choice

The auditor decided to test accounts payable by sending open-ended (blank) confirmations to selected vendors.The auditor's best approach in selecting the vendor accounts to confirm is to

• A)Select vendor accounts with large balances.
• B)Select vendor accounts at random in order to apply a statistical sampling procedure.
• C)Select vendor accounts based on the number of purchases from vendors during the year.
• D)Select vendor accounts that are past due.

---

Definitions:

Direct Materials Price Variance

The difference between the actual cost of direct materials and the expected (or standard) cost, used in manufacturing and budgeting.

Direct Materials Quantity Variance

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

Total Cost Variance

The overall difference between the actual costs incurred and the standard or budgeted costs, across all categories of expenses.

Variable Factory Overhead

Costs of manufacturing that vary with the level of production output, such as utility costs for machinery.