The purpose of the audit procedure to "examine underlying documentation for subsequent cash disbursements" is to
A)uncover liabilities on the balance sheet that should not have been recorded until a subsequent period.
B)find the documentation relating to a cash disbursement.
C)uncover payments made in a subsequent accounting period that represent liabilities at the balance sheet date.
D)uncover cash disbursements recorded in a subsequent accounting period that should be recorded in that period.

Question

Quizplus · Accepted Answer

This audit procedure is designed to identify payments made after the balance sheet date that should have been included as liabilities in the current period. By examining the underlying documentation, auditors can determine whether these subsequent cash disbursements represent liabilities at the balance sheet date, and whether they were properly recorded in the subsequent period. This helps to ensure the completeness and accuracy of the financial statements. Therefore, option C is the best choice.

The Purpose of the Audit Procedure to "Examine Underlying Documentation