Which of the Following Procedures Would an Auditor Most Likely

question 20

Multiple Choice

Which of the following procedures would an auditor most likely perform in searching for unrecorded payables?

• A) Reconcile receiving reports with related cash payments made just prior to year-end.
• B) Contrast the ratio of accounts payable to purchases with the prior year's ratio.
• C) Vouch a sample of creditor balances to supporting invoices, receiving reports and purchase orders.
• D) Compare cash payments occurring after the balance sheet date with the accounts payable trial balance.

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Definitions:

Risk-Free Rate

The theoretical return on investment with no risk of financial loss, typically represented by the yield on government securities.

Standard Deviation

A statistical measure that quantifies the amount of variability or dispersion around an average.

Optimal

The most favorable or desirable condition, outcome, or level, often in terms of efficiency or success.

Minimum-Variance Portfolio

A portfolio constructed to achieve the lowest possible risk (variance) for a given rate of expected return, optimizing risk-adjusted returns.