A Client's Procurement System Ends with the Assumption of a Liability

question 72

Multiple Choice

A client's procurement system ends with the assumption of a liability and the eventual payment of the liability.Which of the following best describes the auditor's primary concern with respect to liabilities resulting from the procurement 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:

Total Output

The complete quantity of goods or services produced by a company, sector, or economy within a specific timeframe.

Exports

Sales of goods or services produced in one country purchased by residents of another country.

Imported Goods

Goods brought into a country from abroad for sale.

Excise Tax

A tax levied on specific goods, services, or transactions, usually to discourage their use or generate revenue.