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 allows the auditor to ensure that all transactions related to accounts payable have been properly recorded and included in the financial statements. This also helps the auditor detect any potential cutoff errors, such as recording inventory as accounts payable after the cutoff date. Comparing cutoff reports with purchase orders, and vendors' invoices with vendors' statements may be useful, but they do not directly address cutoff testing. Coordinating mailing of confirmations is also unrelated to establishing the correctness of the accounts payable cutoff.

In Order to Efficiently Establish the Correctness of the Accounts