Question 1

An auditor must consider industry factors when auditing the purchasing process.Name two industry factors and explain why they are important.

Accepted Answer

The adequacy of the supply of raw materi

Question 2

The purchase requisition is often prepared _______.

Accepted Answer

A) manually, and it represents the end of the transaction trail of documentary evidence in support of management's assertion of occurrence of purchase transactions 
B) electronically, and it represents the end of the transaction trail of documentary evidence in support of management's assertion of occurrence of purchase transactions 
C) electronically, and it represents the start of the transaction trail of documentary evidence in support of management's assertion of occurrence of purchase transactions 
D) manually, and it represents the start of the transaction trail of documentary evidence in support of management's assertion of occurrence of purchase transactions 
A) manually, and it represents the end of the transaction trail of documentary evidence in support of management's assertion of occurrence of purchase transactions 
B) electronically, and it represents the end of the transaction trail of documentary evidence in support of management's assertion of occurrence of purchase transactions 
C) electronically, and it represents the start of the transaction trail of documentary evidence in support of management's assertion of occurrence of purchase transactions 
D) manually, and it represents the start of the transaction trail of documentary evidence in support of management's assertion of occurrence of purchase transactions

Question 3

Many clients build in redundant controls _______.

Accepted Answer

A) so if one control does not find a misstatement, another control will detect the problem 
B) so if one control does not find a misstatement, another control will also not detect the problem 
C) to increase automation and reduce human error 
D) due to their large size and lack of communication across the organization 
A) so if one control does not find a misstatement, another control will detect the problem 
B) so if one control does not find a misstatement, another control will also not detect the problem 
C) to increase automation and reduce human error 
D) due to their large size and lack of communication across the organization

Question 4

When auditors choose to send confirmations of accounts payable, accounts with _______.

Accepted Answer

A) zero or small balances should be among those selected for negative confirmation because they may be more understated than accounts with large balances 
B) zero or small balances should be ignored because they are likely immaterial 
C) zero or small balances should be among those selected for confirmation because they may be more understated than accounts with large balances 
D) extremely large balances should be among those selected for confirmation because they may be more understated than accounts with smaller balances 
A) zero or small balances should be among those selected for negative confirmation because they may be more understated than accounts with large balances 
B) zero or small balances should be ignored because they are likely immaterial 
C) zero or small balances should be among those selected for confirmation because they may be more understated than accounts with large balances 
D) extremely large balances should be among those selected for confirmation because they may be more understated than accounts with smaller balances

Question 5

If a company is growing, it is common to expect purchases, inventory, and _______.

Accepted Answer

A) accounts receivable to grow at different rates 
B) accounts payable to grow at different rates 
C) accounts payable to grow at approximately the same rates 
D) accounts receivable to grow at approximately the same rates 
A) accounts receivable to grow at different rates 
B) accounts payable to grow at different rates 
C) accounts payable to grow at approximately the same rates 
D) accounts receivable to grow at approximately the same rates

Question 6

In assessing inherent risk for the purchasing process assertions, the auditor should consider pervasive factors that _______.

Accepted Answer

A) influence the understatement or overstatement of payables and expenses 
B) influence the understatement of expenses only 
C) influence the overstatement of payables only 
D) lead to risk factors associated with purchases 
A) influence the understatement or overstatement of payables and expenses 
B) influence the understatement of expenses only 
C) influence the overstatement of payables only 
D) lead to risk factors associated with purchases

Question 7

In larger public companies, Evaluated Receipts Settlement (ERS) transactions represent _______.

Accepted Answer

A) 50 - 75% of all transactions 
B) 75 - 90% of all transactions 
C) 0 - 25% of all transactions 
D) 25- 50% of all transactions 
A) 50 - 75% of all transactions 
B) 75 - 90% of all transactions 
C) 0 - 25% of all transactions 
D) 25- 50% of all transactions

Question 8

The rights and obligations assertion with respect to accounts payable relates to whether the _______.

Accepted Answer

A) accounts receivable reflect the recorded asset of the entity 
B) accounts receivable reflect the recorded liability of the entity 
C) accounts payable reflect the recorded liability of the entity 
D) accounts payable reflect the recorded asset of the entity 
A) accounts receivable reflect the recorded asset of the entity 
B) accounts receivable reflect the recorded liability of the entity 
C) accounts payable reflect the recorded liability of the entity 
D) accounts payable reflect the recorded asset of the entity

Question 9

What is a shipping report?

Accepted Answer

A) A report prepared on the shipment of goods being returned to vendors and showing the type and quantities of goods shipped 
B) A return authorization report 
C) A report stating the particulars of a debit to accounts payable, including the specific items returned, prices, and amount debited 
D) A report stating the particulars of a debit to accounts payable, including the specific items returned, prices, and amount credited 
A) A report prepared on the shipment of goods being returned to vendors and showing the type and quantities of goods shipped 
B) A return authorization report 
C) A report stating the particulars of a debit to accounts payable, including the specific items returned, prices, and amount debited 
D) A report stating the particulars of a debit to accounts payable, including the specific items returned, prices, and amount credited

Question 10

The purchasing or procurement process involves _______.

Accepted Answer

A) selecting customers, establishing payment terms, negotiating contracts, purchasing goods, receiving goods, and recording of purchases and payment of liabilities 
B) selecting vendors, establishing payment terms, negotiating contracts, purchasing goods, receiving goods, and recording of purchases and payment of liabilities 
C) selecting vendors, establishing payment terms, negotiating contracts, selling goods, receiving goods, and recording of purchases and payment of liabilities 
D) selecting vendors, establishing payment terms, negotiating contracts, purchasing goods, shipping goods, and recording of purchases and payment of liabilities 
A) selecting customers, establishing payment terms, negotiating contracts, purchasing goods, receiving goods, and recording of purchases and payment of liabilities 
B) selecting vendors, establishing payment terms, negotiating contracts, purchasing goods, receiving goods, and recording of purchases and payment of liabilities 
C) selecting vendors, establishing payment terms, negotiating contracts, selling goods, receiving goods, and recording of purchases and payment of liabilities 
D) selecting vendors, establishing payment terms, negotiating contracts, purchasing goods, shipping goods, and recording of purchases and payment of liabilities

Question 11

Most auditors plan to test controls in the purchases cycle because of the _______.

Accepted Answer

A) high volume of routine transactions in this process 
B) low volume of routine transactions in this process 
C) high volume of irregular transactions in this process 
D) low volume of irregular transactions in this process 
A) high volume of routine transactions in this process 
B) low volume of routine transactions in this process 
C) high volume of irregular transactions in this process 
D) low volume of irregular transactions in this process

Question 12

Evaluated Receipts Settlement (ERS) recognizes the key elements of a purchase transaction involving _______.

Accepted Answer

A) the nature and quantity of the goods received 
B) the price of the goods received 
C) the payment terms for the goods received 
D) All of these answer choices are correct 
A) the nature and quantity of the goods received 
B) the price of the goods received 
C) the payment terms for the goods received 
D) All of these answer choices are correct

Question 13

When auditors perform analytical procedures during the risk assessment for purchases and payables, they should _______.

Accepted Answer

A) develop a skill in analyzing the likely assertions that might be misstated based on the data 
B) develop a skill in analyzing the likely assertions that might be correctly stated based on the data 
C) specifically request the help of the internal auditors 
D) report any misstatements immediately to the SEC 
A) develop a skill in analyzing the likely assertions that might be misstated based on the data 
B) develop a skill in analyzing the likely assertions that might be correctly stated based on the data 
C) specifically request the help of the internal auditors 
D) report any misstatements immediately to the SEC

Question 14

In the given table, match the left of the table with the statements on the right-hand side of table.

Accepted Answer

Phantom vendor purchases are made from f

Question 15

Electronic Invoice Presentment and Payment (EIPP) systems use an independent third party to settle business to business (B2B) transactions.

Accepted Answer

A) True 
 B)False

Question 16

In which of the following fraud risks is the payment usually made to an employee who submitted a fake invoice?

Accepted Answer

A) Fictitious invoices 
B) Phantom vendors 
C) Kickbacks and bid rigging 
D) Duplicate payments 
A) Fictitious invoices 
B) Phantom vendors 
C) Kickbacks and bid rigging 
D) Duplicate payments

Question 17

The "classification and understandability" assertion describing relevant disclosures is part of which of the following?

Accepted Answer

A) Key purchasing cycle assertions 
B) Cash and purchase discounts 
C) Purchase returns and allowances 
D) Purchase transactions 
A) Key purchasing cycle assertions 
B) Cash and purchase discounts 
C) Purchase returns and allowances 
D) Purchase transactions

Question 18

Cash disbursement transactions are one of the major transactions classes with significant volumes of transactions in the_______.

Accepted Answer

The answer of Cash disbursement transactions are one of the...

Question 19

In which of the following shipment arrangements does title pass from seller to buyer when goods are shipped?

Accepted Answer

A) FOB shipping point 
B) FOB destination 
C) FOB port 
D) FOB location 
A) FOB shipping point 
B) FOB destination 
C) FOB port 
D) FOB location

Question 20

A ________ is a formal order to a bank to pay the payee the indicated amount.

Accepted Answer

Check or electronic

An auditor must consider industry factors when auditing the purchasing process.Name two industry factors and explain why they are important.

The purchase requisition is often prepared _______.

Many clients build in redundant controls _______.

When auditors choose to send confirmations of accounts payable, accounts with _______.

If a company is growing, it is common to expect purchases, inventory, and _______.

In assessing inherent risk for the purchasing process assertions, the auditor should consider pervasive factors that _______.

In larger public companies, Evaluated Receipts Settlement (ERS) transactions represent _______.

The rights and obligations assertion with respect to accounts payable relates to whether the _______.

What is a shipping report?

The purchasing or procurement process involves _______.

Most auditors plan to test controls in the purchases cycle because of the _______.

Evaluated Receipts Settlement (ERS) recognizes the key elements of a purchase transaction involving _______.

When auditors perform analytical procedures during the risk assessment for purchases and payables, they should _______.

In the given table, match the left of the table with the statements on the right-hand side of table.

Electronic Invoice Presentment and Payment (EIPP) systems use an independent third party to settle business to business (B2B) transactions.

In which of the following fraud risks is the payment usually made to an employee who submitted a fake invoice?

The "classification and understandability" assertion describing relevant disclosures is part of which of the following?

Cash disbursement transactions are one of the major transactions classes with significant volumes of transactions in the_______.

In which of the following shipment arrangements does title pass from seller to buyer when goods are shipped?

A ________ is a formal order to a bank to pay the payee the indicated amount.

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

An auditor must consider industry factors when auditing the purchasing process.Name two industry factors and explain why they are important.

The purchase requisition is often prepared _______.

Many clients build in redundant controls _______.

When auditors choose to send confirmations of accounts payable, accounts with _______.

If a company is growing, it is common to expect purchases, inventory, and _______.

In assessing inherent risk for the purchasing process assertions, the auditor should consider pervasive factors that _______.

In larger public companies, Evaluated Receipts Settlement (ERS) transactions represent _______.

The rights and obligations assertion with respect to accounts payable relates to whether the _______.

What is a shipping report?

The purchasing or procurement process involves _______.

Most auditors plan to test controls in the purchases cycle because of the _______.

Evaluated Receipts Settlement (ERS) recognizes the key elements of a purchase transaction involving _______.

When auditors perform analytical procedures during the risk assessment for purchases and payables, they should _______.

In the given table, match the left of the table with the statements on the right-hand side of table.

Electronic Invoice Presentment and Payment (EIPP) systems use an independent third party to settle business to business (B2B) transactions.

In which of the following fraud risks is the payment usually made to an employee who submitted a fake invoice?

The "classification and understandability" assertion describing relevant disclosures is part of which of the following?

Cash disbursement transactions are one of the major transactions classes with significant volumes of transactions in the_______.

In which of the following shipment arrangements does title pass from seller to buyer when goods are shipped?

A ________ is a formal order to a bank to pay the payee the indicated amount.

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