C is corrent because the auditor seeks to determine that both sides of the purchase transaction, inventory acquisition, and accounts payable, are treated in the proper period. Thus, payables should exist for items received before year-end and for other goods for which title has passed.
A is incorrect since the purchase order (generally an internal document) is of limited assistance, if any, in determining when title has passed.
B is incorrect because, although cutoff tests and accounts payable both relate to year-end balances, coordinating the mailing of confirmations is not necessary.
D is incorrect because the evidence obtained by comparing invoices with statements does not answer the question of when title passed. In this situation, the auditor seeks to determine that both sides of the purchase transaction are treated in the proper period. To make this determination, the auditor must know when title has passed.
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