When the Auditors Select a Sample of Items from the Vouchers

question 9

Multiple Choice

When the auditors select a sample of items from the vouchers payable register for the last month of the period under audit and trace these items to underlying documents, the auditors are gathering evidence primarily in support of the assertion that:

• A) Recorded obligations were paid.
• B) Incurred obligations were recorded in the correct period.
• C) Recorded obligations occurred prior to year-end.
• D) Cash disbursements were recorded as incurred obligation.

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Definitions:

Efficient Market

A market in which asset prices fully reflect all available information, leading to prices that accurately represent the asset's true value.

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time, used to evaluate the profitability of an investment.

Aversion To Ambiguity

A preference to avoid options for which the probability of outcomes is unknown, indicating a dislike for uncertain situations.

Gambler's Fallacy

The mistaken belief that if something happens more frequently than normal during a given period, it will happen less frequently in the future, or vice versa.