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:

Adjusting Accounts

The process of updating ledger accounts through adjusting entries to reflect accurate financial activity and positions.

Temporary Accounts

Accounts used to track revenues, expenses, and withdrawals or dividends during an accounting period, which are closed and reset at the end of the period.

Debits And Credits

Fundamental accounting principles that are used to record every financial transaction, where debits must equal credits in every transaction.

Account Type

A classification system used within accounting to differentiate between the various financial transactions, assets, liabilities, and owners' equity carried out or held by a business.