A/P Audit Procedures Quiz

When testing whether all payables are recorded, which assertion is most relevant?

• Existence

• Rights and obligations

• Completeness

• Valuation

Which of the following audit procedures best helps detect unrecorded liabilities?

• Confirming balances with vendors

• Reviewing bank reconciliations

• Examining cash disbursements made after year-end

• Performing inventory observation

Reviewing vendor statements and reconciling them with the accounts payable subledger helps test which assertion?

• Existence

• Valuation

• Presentation

• Completeness

Which procedure best tests the existence of accounts payable?

• Tracing receiving reports to purchase invoices

• Reconciling vendor statements to the subledger

• Sending confirmations to major vendors

• Reviewing post-year-end cash payments

Which of the following three-way matches is essential in detecting unrecorded liabilities?

• Purchase order – Goods issue – Payroll ledger

• Vendor invoice – Cash disbursement – Bank statement

• Receiving report – Purchase order – Vendor invoice

• Sales invoice – Purchase order – Inventory record

Your client's accounts payable balance decreased by 30% from last year, while purchases remained stable. What should be your response?

• Conclude payables are likely overstated

• Test for understatement of payables

• Reclassify trade payables as notes

• Ignore unless flagged by internal audit

If an auditor tests whether purchase transactions and payables are recorded at the correct amounts, which assertion is addressed?

• Existence

• Completeness

• Valuation

• Classification

A company has sales of $10,000,000 and cost of goods sold of $6,000,000. If historical A/P turnover is 6×, what should be the expected average accounts payable?

• $833,333

• $1,000,000

• $1,200,000

• $1,500,000