An Auditor Traced a Sample of Purchase Orders and the Related

question 54

Multiple Choice

An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and the cash disbursements journal. The purpose of this substantive procedure most likely was to:

• A)identify unusually large purchases that should be investigated further.
• B)verify that cash disbursements were for goods actually received.
• C)determine that purchases were properly recorded.
• D)test whether payments were for goods actually ordered.

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Definitions:

Socially Optimal Quantity

The socially optimal quantity is the level of production of a good or service that maximizes societal welfare, considering both private and external benefits and costs.

Seller

A seller is an individual or entity that offers goods or services for sale in the market.

Buyer

An individual or entity that acquires goods or services in exchange for money, playing a crucial role in the dynamics of supply and demand in the marketplace.

Social-Cost Curve

illustrates the total cost of producing a good or service, including both private costs incurred by businesses and external costs borne by society.