In order to efficiently establish the correctness of the accounts payable cutoff, an auditor will be most likely to
A) Coordinate cutoff tests with physical inventory observation.
B) Compare cutoff reports with purchase orders.
C) Compare vendors' invoices with vendors' statements.
D) Coordinate mailing of confirmations with cutoff tests.

Question

Quizplus · Accepted Answer

Coordinating cutoff tests with physical inventory observation will allow the auditor to ensure that all relevant purchases and payables are properly recorded at the end of the period. This approach will also help to identify any discrepancies between physical inventory and the recorded inventory balances, which can impact the accounts payable cutoff. Comparing cutoff reports with purchase orders, comparing vendors' invoices with vendors' statements, and coordinating mailing of confirmations with cutoff tests are all important steps in the audit process, but they may not directly address the issue of accounts payable cutoff.

In Order to Efficiently Establish the Correctness of the Accounts