Question 1

What is the procurement process?

Accepted Answer

A) A process that involves selecting vendors, establishing payment terms, negotiating contracts, purchasing goods, receiving goods, and recording of purchases and payment of liabilities. 
B) A process in which a significant increase in the current ratio compared to prior years' experience may indicate completeness problems. 
C) A process in which a significant decline in payables as a percent of total assets may indicate completeness problems. 
D) The purchase returns process involving return of goods. 
A) A process that involves selecting vendors, establishing payment terms, negotiating contracts, purchasing goods, receiving goods, and recording of purchases and payment of liabilities. 
B) A process in which a significant increase in the current ratio compared to prior years' experience may indicate completeness problems. 
C) A process in which a significant decline in payables as a percent of total assets may indicate completeness problems. 
D) The purchase returns process involving return of goods.

Question 2

All of the following are source documents or files related to the payroll process, EXCEPT _______.

Accepted Answer

A) payroll authorization 
B) time card 
C) vacation request form 
D) All of the answer choices are correct. 
A) payroll authorization 
B) time card 
C) vacation request form 
D) All of the answer choices are correct.

Question 3

Which of the following purchases must be managed aggressively to minimize inventory obsolescence?

Accepted Answer

A) Electronic computer manufacturing 
B) Hotels and motels 
C) Universities and colleges 
D) Supermarkets and grocery stores 
A) Electronic computer manufacturing 
B) Hotels and motels 
C) Universities and colleges 
D) Supermarkets and grocery stores

Question 4

Pervasive factors that might motivate management to misstate purchases process assertions include _______.

Accepted Answer

A) pressure to understate expenses in order to report achieving announced profitability targets or industry norms, which were not achieved in reality 
B) pressure to understate payables in order to report a higher level of working capital when the entity is experiencing liquidity problems 
C) pressure to understate payables in order to report a higher level of working capital when the entity is experiencing going concern doubts 
D) All of these answer choices are correct 
A) pressure to understate expenses in order to report achieving announced profitability targets or industry norms, which were not achieved in reality 
B) pressure to understate payables in order to report a higher level of working capital when the entity is experiencing liquidity problems 
C) pressure to understate payables in order to report a higher level of working capital when the entity is experiencing going concern doubts 
D) All of these answer choices are correct

Question 5

If discounts are taken for early payment, _______.

Accepted Answer

A) purchase discounts are deferred when recording the cash disbursement 
B) purchase discounts are recorded when recording the cash disbursement 
C) accounts receivable should be debited for the amount of the discount 
D) accounts payable should be credited for the amount of the discount 
A) purchase discounts are deferred when recording the cash disbursement 
B) purchase discounts are recorded when recording the cash disbursement 
C) accounts receivable should be debited for the amount of the discount 
D) accounts payable should be credited for the amount of the discount

Question 6

Which three of the following are included in common disclosures in the purchases process?

Accepted Answer

A) Reclassification of material debit balances in accounts payable as accounts receivable 
B) Segregation of short-term payables from long-term payables 
C) Dependence on a single vendor or a small number of vendors 
D) Credit Memo 
A) Reclassification of material debit balances in accounts payable as accounts receivable 
B) Segregation of short-term payables from long-term payables 
C) Dependence on a single vendor or a small number of vendors 
D) Credit Memo

Question 7

The expenditure process is particularly prone to a risk of employee fraud through _______.

Accepted Answer

A) unauthorized receipts of cash. 
B) authorized disbursements of cash. 
C) unauthorized disbursements of cash. 
D) authorized receipts of cash. 
A) unauthorized receipts of cash. 
B) authorized disbursements of cash. 
C) unauthorized disbursements of cash. 
D) authorized receipts of cash.

Question 8

What is a voucher?

Accepted Answer

A) It is an internal document used to record a purchase on account and has information about the vendor, amount due, payment date, and due date. 
B) It is an electronic file that accumulates data on purchases, accounts payable, and cash disbursements. 
C) The journal of original entry where each purchase is recorded. 
D) It is the bill from the vendor stating the number of items shipped or services rendered, the amount due, the payment terms, and the date billed. 
A) It is an internal document used to record a purchase on account and has information about the vendor, amount due, payment date, and due date. 
B) It is an electronic file that accumulates data on purchases, accounts payable, and cash disbursements. 
C) The journal of original entry where each purchase is recorded. 
D) It is the bill from the vendor stating the number of items shipped or services rendered, the amount due, the payment terms, and the date billed.

Question 9

Which of the following describes a purchases database?

Accepted Answer

A) Electronic files that accumulate data on purchases, accounts payable, and cash disbursements. 
B) The check (EFT) information with purchase order and receiving. 
C) The check (EFT) information with the underlying information on the voucher. 
D) Electronic files that contain information on the cash disbursements journal with the related voucher information. 
A) Electronic files that accumulate data on purchases, accounts payable, and cash disbursements. 
B) The check (EFT) information with purchase order and receiving. 
C) The check (EFT) information with the underlying information on the voucher. 
D) Electronic files that contain information on the cash disbursements journal with the related voucher information.

Question 10

You are auditing the purchasing process of Smithwick Spices.Give at least two examples of test data you might use on programmed application controls to determine whether expected results appear on exception reports.

Accepted Answer

Student answers will vary.
The auditor m

Question 11

When performing substantive tests of the payroll process, recalculating accrued payroll tax liabilities at year-end to underlying payroll records is a test of which of the following key assertions?

Accepted Answer

A) Occurrence, accuracy, and classification 
B) Occurrence, completeness, and valuation 
C) Completeness, valuation, and existence 
A) Occurrence, accuracy, and classification 
B) Occurrence, completeness, and valuation 
C) Completeness, valuation, and existence

Question 12

The payroll process includes transactions and balances related to which of the following?

Accepted Answer

A) Rebates 
B) Contractor payments 
C) Expense reimbursements 
D) Commissions 
A) Rebates 
B) Contractor payments 
C) Expense reimbursements 
D) Commissions

Question 13

An entity's purchasing process consists of _______.

Accepted Answer

A) activities related to the acquisition of, and payment for, goods and services. 
B) activities related to the selling of, and payment received for, goods and services. 
C) repurchasing shares of stock from shareholders 
D) refinancing loans and notes payable with a bank 
A) activities related to the acquisition of, and payment for, goods and services. 
B) activities related to the selling of, and payment received for, goods and services. 
C) repurchasing shares of stock from shareholders 
D) refinancing loans and notes payable with a bank

Question 14

The purchasing or procurement process involves selecting customers, establishing payment terms, negotiating contracts, purchasing goods, receiving goods, and recording of purchases and payment of liabilities.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is included in a three-way match?

Accepted Answer

A) Voucher 
B) Accuracy of purchases 
C) Receiving report 
D) Occurrence of purchases 
A) Voucher 
B) Accuracy of purchases 
C) Receiving report 
D) Occurrence of purchases

Question 16

When there is the potential for material misstatements from purchase adjustments transactions, _______.

Accepted Answer

A) the auditor should obtain an understanding of all immaterial aspects of the internal control structure components and consider the factors that affect the risk of such misstatements 
B) the auditor should obtain an understanding of all relevant aspects of the internal control structure components and consider the factors that affect the risk of such misstatements 
C) the auditor should obtain an understanding of all relevant aspects of the client legal counsel's internal control structure components and consider the factors that affect the risk of such misstatements 
D) the auditor should obtain an understanding of all relevant aspects of the external control structure components and consider the factors that affect the risk of such misstatements 
A) the auditor should obtain an understanding of all immaterial aspects of the internal control structure components and consider the factors that affect the risk of such misstatements 
B) the auditor should obtain an understanding of all relevant aspects of the internal control structure components and consider the factors that affect the risk of such misstatements 
C) the auditor should obtain an understanding of all relevant aspects of the client legal counsel's internal control structure components and consider the factors that affect the risk of such misstatements 
D) the auditor should obtain an understanding of all relevant aspects of the external control structure components and consider the factors that affect the risk of such misstatements

Question 17

Which of the following is performed by Electronic Invoice Presentment and Payment (EIPP) systems?

Accepted Answer

A) Purchasing an electronic system that uses a third-party payment process to settle a business to business transaction 
B) Creating a shipping notice system 
C) Purchasing an evaluated receipt system 
D) Processing a payment from the purchaser to the supplier as an independent third party 
A) Purchasing an electronic system that uses a third-party payment process to settle a business to business transaction 
B) Creating a shipping notice system 
C) Purchasing an evaluated receipt system 
D) Processing a payment from the purchaser to the supplier as an independent third party

Question 18

Which of the following is tested by dividing current year payroll expenses by prior year payroll expenses?

Accepted Answer

A) Revenue per employee 
B) Percentage change in payroll expenses from prior year 
C) Total payroll costs as a percent of revenues 
D) Compare current year payroll liability with prior year payroll liability 
A) Revenue per employee 
B) Percentage change in payroll expenses from prior year 
C) Total payroll costs as a percent of revenues 
D) Compare current year payroll liability with prior year payroll liability

Question 19

The search for unrecorded liabilities consists of procedures designed specifically to detect _______.

Accepted Answer

A) significant unrecorded obligations at the balance sheet date (or as of an interim date) 
B) insignificant unrecorded obligations at the balance sheet date (or as of an interim date) 
C) significant unrecorded obligations at the income statement date (or as of an interim date) 
D) significant recorded obligations at the balance sheet date (or as of an interim date) 
A) significant unrecorded obligations at the balance sheet date (or as of an interim date) 
B) insignificant unrecorded obligations at the balance sheet date (or as of an interim date) 
C) significant unrecorded obligations at the income statement date (or as of an interim date) 
D) significant recorded obligations at the balance sheet date (or as of an interim date)

Question 20

Phantom vendors involve _______.

Accepted Answer

A) purchases that are made from fictitious vendors 
B) purchases that are made from fictitious employees 
C) payments received from fictitious vendors 
D) payments received from fictitious employees 
A) purchases that are made from fictitious vendors 
B) purchases that are made from fictitious employees 
C) payments received from fictitious vendors 
D) payments received from fictitious employees

What is the procurement process?

All of the following are source documents or files related to the payroll process, EXCEPT _______.

Which of the following purchases must be managed aggressively to minimize inventory obsolescence?

Pervasive factors that might motivate management to misstate purchases process assertions include _______.

If discounts are taken for early payment, _______.

Which three of the following are included in common disclosures in the purchases process?

The expenditure process is particularly prone to a risk of employee fraud through _______.

What is a voucher?

Which of the following describes a purchases database?

You are auditing the purchasing process of Smithwick Spices.Give at least two examples of test data you might use on programmed application controls to determine whether expected results appear on exception reports.

When performing substantive tests of the payroll process, recalculating accrued payroll tax liabilities at year-end to underlying payroll records is a test of which of the following key assertions?

The payroll process includes transactions and balances related to which of the following?

An entity's purchasing process consists of _______.

The purchasing or procurement process involves selecting customers, establishing payment terms, negotiating contracts, purchasing goods, receiving goods, and recording of purchases and payment of liabilities.

Which of the following is included in a three-way match?

When there is the potential for material misstatements from purchase adjustments transactions, _______.

Which of the following is performed by Electronic Invoice Presentment and Payment (EIPP) systems?

Which of the following is tested by dividing current year payroll expenses by prior year payroll expenses?

The search for unrecorded liabilities consists of procedures designed specifically to detect _______.

Phantom vendors involve _______.

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

Risk Assessment Part Iaudit Risk and Audit Strategy

Risk Assessment Part Iiunderstanding the Client

Audit Evidence

Understanding of the Clients System of Internal Controls

Data Analyticsoverview and Application

Risk Responseperforming Tests of Controls

Risk Responseperforming Substantive Procedures

Risk Responseaudit Sampling for Substantive Testing

Auditing the Revenue Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Completing the Audit

Reporting on the Audit

Filters

Exam 12: Auditing the Purchases Cycle and Payroll Cycle

What is the procurement process?

All of the following are source documents or files related to the payroll process, EXCEPT _______.

Which of the following purchases must be managed aggressively to minimize inventory obsolescence?

Pervasive factors that might motivate management to misstate purchases process assertions include _______.

If discounts are taken for early payment, _______.

Which three of the following are included in common disclosures in the purchases process?

The expenditure process is particularly prone to a risk of employee fraud through _______.

What is a voucher?

Which of the following describes a purchases database?

You are auditing the purchasing process of Smithwick Spices.Give at least two examples of test data you might use on programmed application controls to determine whether expected results appear on exception reports.

When performing substantive tests of the payroll process, recalculating accrued payroll tax liabilities at year-end to underlying payroll records is a test of which of the following key assertions?

The payroll process includes transactions and balances related to which of the following?

An entity's purchasing process consists of _______.

The purchasing or procurement process involves selecting customers, establishing payment terms, negotiating contracts, purchasing goods, receiving goods, and recording of purchases and payment of liabilities.

Which of the following is included in a three-way match?

When there is the potential for material misstatements from purchase adjustments transactions, _______.

Which of the following is performed by Electronic Invoice Presentment and Payment (EIPP) systems?

Which of the following is tested by dividing current year payroll expenses by prior year payroll expenses?

The search for unrecorded liabilities consists of procedures designed specifically to detect _______.

Phantom vendors involve _______.

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

Risk Assessment Part Iaudit Risk and Audit Strategy

Risk Assessment Part Iiunderstanding the Client

Audit Evidence

Understanding of the Clients System of Internal Controls

Data Analyticsoverview and Application

Risk Responseperforming Tests of Controls

Risk Responseperforming Substantive Procedures

Risk Responseaudit Sampling for Substantive Testing

Auditing the Revenue Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Completing the Audit

Reporting on the Audit

Filters