If the Auditor Selects a Sample of Open Accounts Payable

question 37

True/False

If the auditor selects a sample of open accounts payable and vouches the details to supporting purchase documents,the auditor is testing the objective of validity.

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Definitions:

Variable Selling Expenses

Expenditures that change in direct correlation with the amount of sales, like commission fees and delivery costs.

Fixed Selling Expenses

Costs related to selling that do not change with the level of sales, such as salaries of sales staff and rent for sales space.

High-Low Method

A technique in cost accounting used to estimate fixed and variable costs based on the highest and lowest levels of activity.

Utilities Cost

The expenses incurred for essential services such as electricity, water, and gas used by a business.