Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities?
A)Trace a sample of accounts payable entries recorded just before year-end to the unmatched receiving report file.
B)Compare a sample of purchase orders issued just after year-end with the year-end accounts payable trial balance.
C)Vouch a sample of cash disbursements recorded just after year-end to receiving reports and vendor invoices.
D)Scan the cash disbursements entries recorded just before year-end for indications of unusual transactions.

Question

Quizplus · Accepted Answer

Vouching a sample of cash disbursements recorded just after year-end to receiving reports and vendor invoices is a procedure aimed at identifying liabilities that were incurred before the end of the year but not recorded until after. This helps in ensuring that all liabilities are recorded in the period in which they are incurred, thus adhering to the accrual basis of accounting.

Which of the Following Procedures Would an Auditor Most Likely