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Purchase Return Book

The auditor i...

Question

The auditor is most likely examine related party transactions very carefully while vouching _________.

A

credit sales

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B

sales returns

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C

credit purchases

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D

cash purchases

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Solution

The correct option is C credit purchases
Goods might be purchased on credit from the related parties. While vouching the credit purchases, auditor has to ensure that the goods purchased from related parties at the normal purchase price prevailing in the market. No extra ordinary charges are levied on such purchases.

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