The two most important audit procedures for prepayments are:
A) tests of controls and substantive tests of transactions.
B) tests for reasonableness or plausible relationships using analytical procedures and recalculation.
C) consistency and accounting standards.
D) tests of controls and tests of details of balances.

Question

Quizplus · Accepted Answer

Tests for reasonableness or plausible relationships using analytical procedures and recalculation are the most important audit procedures for prepayments as they allow auditors to verify the completeness and accuracy of prepayments by comparing them to expectations based on historical data or industry norms. Tests of controls and tests of details of balances may also be necessary but are not as essential as analytical procedures and recalculations. Consistency and accounting standards are general concepts that apply to all audit procedures and are not specific to prepayments.

The Two Most Important Audit Procedures for Prepayments Are