9. The audit procedures used to verify accrued liabilities differ from those employed for the verification of accounts payable because: (a) (b) (c) (d) Evidence supporting accrued liabilities is nonexistent while evidence supporting accounts payable is readily available. Accrued liability balances are less material than accounts payable balances. Accrued liabilities usually pertain to services of a continuing nature while accounts payable are the result of completed transactions. Accrued liabilities at year end will become accounts payable during the following year. 10. A receiving department receives copies of purchase orders for use in identifying and recording receipts of inventory. The purchase orders list the name of the vendor and the quantities of the materials ordered. A possible error that could result due to this system is: (a) Payment for unauthorized purchases. (b) Overpayment for partial deliveries. (c) Delay in recording purchases. (d) Payment to unauthorized vendors. Which of the following provides the best evidence of the transfer of accountability for incoming material from the receiving department to other departments or activities? (a) Oral evidence from personnel in both receiving and other 11. (b) (c) (d) Documentary evidence in the form of entries in journals and ledgers. The physical evidence of that type of material in other departments. An authorized signature on the prescribed transfer form. Based on observations made during an audit, the independent auditor should discuss with management the effectiveness of the company's controls that protect against the purchase of (a) Supplies individually ordered, without considering possible volume 12. discounts. Required supplies provided by a vendor who offers no trade or cash discount. (b) (c) (d) New equipment that is needed but does not qualify for an accelerated write off under the class life rules. Inventory items acquired based on an economic order quantity (EOQ) inventory management concept