Which of the Following Audit Procedures Is Best for Identifying

question 14

Multiple Choice

Which of the following audit procedures is best for identifying unrecorded trade accounts payable?

• A)Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payables apply to the prior period.
• B)Investigating payables recorded just prior to and just subsequent to the balance sheet date to determine whether receiving reports support them.
• C)Examining unusual relationships between monthly accounts payable balances and recorded cash payments.
• D)Reconciling vendors' statements to the file of receiving reports to identify items received just prior to the balance sheet date.

---

Definitions:

Agency Agreement

A contract between two parties where one (the agent) agrees to represent or act on behalf of the other (the principal) in business dealings.

Avoid

To keep away from or refrain from engaging in something, often due to potential risks or negative outcomes.

Equal Dignity Rule

A rule requiring that an agent’s authority be in writing if the contract to be made on behalf of the principal must be in writing.

Good Faith

An honest intention to act without taking an unfair advantage over another party, typically in the context of contracts or negotiations.