Auditor Confirmation of Accounts Payable Balances at the Balance Sheet

question 89

Multiple Choice

Auditor confirmation of accounts payable balances at the balance sheet date may not need to be performed by the auditor because

• A) this is a duplication of cutoff tests.
• B) there is likely to be other reliable external evidence available to support the balances.
• C) accounts payable balances at the balance sheet date may not be paid before the audit is completed.
• D) correspondence with the audit client's attorney will reveal all legal action by vendors for nonpayment.

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Definitions:

Economic Value

The measurement of the benefit provided by a good or service to an economic agent.

Quarterly Dividends

Dividends paid by a corporation to its shareholders at the end of each quarter of the fiscal year.

Compounded Quarterly

Interest calculation method where interest is added to the principal four times a year, affecting the total interest earned or paid.

Redeemed

In financial terms, to exchange a financial instrument like a bond or coupon for its value in cash or goods; also refers to utilizing a reward or benefit.