Which of the Following Statements Is Correct Regarding Accounts Payable

question 17

Multiple Choice

Which of the following statements is correct regarding accounts payable and the auditor's procedures?

• A) Because it is generally more difficult to discover a transaction that has not been recorded than to discover one that has been recorded incorrectly, the audit objective of completeness drives many of the substantive procedures applied to these balances.
• B) A judgment whether an unrecorded payable should be recorded before the financial statements are prepared depends entirely upon the source of the payable.
• C) The confirmation of accounts payable selected from the year-end trial balance of such accounts is most effective in discovering unrecorded liabilities.
• D) Unrecorded payables are often discovered through examining vouchers payable entered into the voucher register prior to the balance sheet date.

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Definitions:

Monopolistically Competitive

Monopolistically competitive refers to a market structure where many firms sell similar but not identical products, with each firm having some degree of market power.

Short Run

A time period in which at least one factor of production is fixed, focusing on immediate effects.

Long Run

A period of time in economics where all factors of production and costs are variable, allowing full industry adjustment.

Economic Profit

The profit a company makes after subtracting both its explicit and implicit costs, including opportunity costs, from its total revenues.