Question 1

A strong tone at the top about the importance of accurate financial reporting _______.

Accepted Answer

A) discourages the under accrual of expenses and liabilities 
B) discourages the over accrual of expenses and liabilities 
C) encourages the under accrual of expenses and liabilities 
D) encourages the over accrual of expenses and liabilities 
A) discourages the under accrual of expenses and liabilities 
B) discourages the over accrual of expenses and liabilities 
C) encourages the under accrual of expenses and liabilities 
D) encourages the over accrual of expenses and liabilities

Question 2

One of the common disclosures in the _______ is reclassification of material debit balances in accounts payable as accounts receivable.

Accepted Answer

A) purchase transactions 
B) net sale transactions 
C) purchase adjustments 
D) purchasing process 
A) purchase transactions 
B) net sale transactions 
C) purchase adjustments 
D) purchasing process

Question 3

Which of the following is in an assertion of relevant account balances of a key purchase transaction?

Accepted Answer

A) Valuation and allocation at historical cost 
B) Accounts payable 
C) Purchase returns and allowances 
D) Purchase returns 
A) Valuation and allocation at historical cost 
B) Accounts payable 
C) Purchase returns and allowances 
D) Purchase returns

Question 4

You are a senior auditor on a new audit client.Your supervisor has asked you to audit the cash disbursements of the new client.You begin by gaining an understanding of the flow of transactions and have identified the following risk (what could go wrong): A check may not be recorded.
Identify at least two controls that may address this risk.

Accepted Answer

The computer reports any breaks in the s

Question 5

________ systems use an independent third party to settle a business to business (B2B) transaction.

Accepted Answer

EIPP | Electronic Invoice Pres

Question 6

Explain how an Electronic Invoice Presentment and Payment (EIPP) system works and why they are used to settle business to business transactions.

Accepted Answer

Many ERS systems use what is called Elec

Question 7

Common documents and files that are found in the process of buying goods include_______.

Accepted Answer

A) purchase requisition 
B) approved vendor master file 
C) purchase order 
D) All of these answer choices are correct. 
A) purchase requisition 
B) approved vendor master file 
C) purchase order 
D) All of these answer choices are correct.

Question 8

Key assertions relating to accounts payable account balances are _______.

Accepted Answer

A) existence, rights and obligations, completeness, valuation and allocation 
B) existence, rights and obligations, truthfulness, valuation and allocation 
C) existence, rights and obligations, going concern, valuation and allocation 
D) presentability, rights and obligations, completeness, valuation and allocation 
A) existence, rights and obligations, completeness, valuation and allocation 
B) existence, rights and obligations, truthfulness, valuation and allocation 
C) existence, rights and obligations, going concern, valuation and allocation 
D) presentability, rights and obligations, completeness, valuation and allocation

Question 9

When reviewing the results of analytical procedures, the auditor needs to bring an appropriate level of _______.

Accepted Answer

A) professional skepticism 
B) professional confidence 
C) statistical sampling 
D) nonstatistical sampling 
A) professional skepticism 
B) professional confidence 
C) statistical sampling 
D) nonstatistical sampling

Question 10

A ________is a form showing the description, quantity, and other data pertaining to the goods the vendor has authorized the purchaser to return.It serves as the basis for initiating the purchase return.

Accepted Answer

Purchase R

Question 11

The purchasing or procurement process typically involves _______.

Accepted Answer

A) the revenue and receivables accounts 
B) selecting vendors, establishing payment terms, negotiating contracts, selling goods, receiving goods, and recording of purchases and payment of liabilities 
C) selecting vendors, establishing payment terms, negotiating contracts, purchasing goods, receiving goods, and recording of purchases and payment of liabilities 
D) the revenue and cost of goods sold accounts 
A) the revenue and receivables accounts 
B) selecting vendors, establishing payment terms, negotiating contracts, selling goods, receiving goods, and recording of purchases and payment of liabilities 
C) selecting vendors, establishing payment terms, negotiating contracts, purchasing goods, receiving goods, and recording of purchases and payment of liabilities 
D) the revenue and cost of goods sold accounts

Question 12

Steps used in developing an audit strategy for management assertions include _______.

Accepted Answer

A) understanding the flow of transactions in a given transaction cycle 
B) assessing whether controls exist to mitigate what can go wrong 
C) determining an audit strategy at the assertion level 
D) All of these answer choices are correct 
A) understanding the flow of transactions in a given transaction cycle 
B) assessing whether controls exist to mitigate what can go wrong 
C) determining an audit strategy at the assertion level 
D) All of these answer choices are correct

Question 13

Which of the following is important for the auditor to understand before proceeding with an audit of the payroll process?

Accepted Answer

A) Knowledge of whether the entity is labor or capital intensive 
B) The nature of compensation (hourly vs.salaried) 
C) The importance of bonuses or other compensation arrangements 
D) All of the answer choices are correct. 
A) Knowledge of whether the entity is labor or capital intensive 
B) The nature of compensation (hourly vs.salaried) 
C) The importance of bonuses or other compensation arrangements 
D) All of the answer choices are correct.

Question 14

Prior experience in accounts payable turnover days combined with knowledge of current purchases can be useful in estimating current payables.

Accepted Answer

A) True 
 B)False

Question 15

The category of misstatements relevant to the purchasing and payroll cycles that consists of error or irregularities in approach, theory, or calculation associated with the expensing of assets or understatement of liabilities is ______.

Accepted Answer

A) expense recording issues 
B) liabilities and payables 
C) accrual estimate failure 
D) reserve recording issues 
A) expense recording issues 
B) liabilities and payables 
C) accrual estimate failure 
D) reserve recording issues

Question 16

Payroll fraud may occur in which of the following ways?

Accepted Answer

A) Payroll transactions are processed for fictitious employees and the funds are diverted for personal use 
B) When there is frequent turnover, there is risk that a new employee will not get on the payroll promptly 
C) Management may misclassify or understate labor costs for government contract work 
D) All of the answer choices are correct. 
A) Payroll transactions are processed for fictitious employees and the funds are diverted for personal use 
B) When there is frequent turnover, there is risk that a new employee will not get on the payroll promptly 
C) Management may misclassify or understate labor costs for government contract work 
D) All of the answer choices are correct.

Question 17

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

Accepted Answer

Substantive tests perform substantive au

Question 18

Which two of the following are involved in recording cash disbursements?

Accepted Answer

A) Check or electronic funds transfer 
B) Cash disbursements journal 
C) Voucher 
D) Purchases database 
A) Check or electronic funds transfer 
B) Cash disbursements journal 
C) Voucher 
D) Purchases database

Question 19

Purchasing/procurement is concerned with _______.

Accepted Answer

A) acquiring all of the goods and services that are vital to an organization 
B) selling all of the goods and services that are vital to an organization 
C) disposing of all of the goods and services that are vital to an organization 
D) acquiring all of the goods and services that are vital to an organization's customers 
A) acquiring all of the goods and services that are vital to an organization 
B) selling all of the goods and services that are vital to an organization 
C) disposing of all of the goods and services that are vital to an organization 
D) acquiring all of the goods and services that are vital to an organization's customers

Question 20

The quality of entity level controls is important to _______.

Accepted Answer

A) the ineffective functioning of transaction level controls 
B) the effective functioning of transaction level controls 
C) the differences between book and taxable income 
D) the quantity of transaction level controls 
A) the ineffective functioning of transaction level controls 
B) the effective functioning of transaction level controls 
C) the differences between book and taxable income 
D) the quantity of transaction level controls

A strong tone at the top about the importance of accurate financial reporting _______.

One of the common disclosures in the _______ is reclassification of material debit balances in accounts payable as accounts receivable.

Which of the following is in an assertion of relevant account balances of a key purchase transaction?

________ systems use an independent third party to settle a business to business (B2B) transaction.

Explain how an Electronic Invoice Presentment and Payment (EIPP) system works and why they are used to settle business to business transactions.

Common documents and files that are found in the process of buying goods include_______.

Key assertions relating to accounts payable account balances are _______.

When reviewing the results of analytical procedures, the auditor needs to bring an appropriate level of _______.

A ________is a form showing the description, quantity, and other data pertaining to the goods the vendor has authorized the purchaser to return.It serves as the basis for initiating the purchase return.

The purchasing or procurement process typically involves _______.

Steps used in developing an audit strategy for management assertions include _______.

Which of the following is important for the auditor to understand before proceeding with an audit of the payroll process?

Prior experience in accounts payable turnover days combined with knowledge of current purchases can be useful in estimating current payables.

The category of misstatements relevant to the purchasing and payroll cycles that consists of error or irregularities in approach, theory, or calculation associated with the expensing of assets or understatement of liabilities is ______.

Payroll fraud may occur in which of the following ways?

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

Which two of the following are involved in recording cash disbursements?

Purchasing/procurement is concerned with _______.

The quality of entity level controls is important to _______.

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

A strong tone at the top about the importance of accurate financial reporting _______.

One of the common disclosures in the _______ is reclassification of material debit balances in accounts payable as accounts receivable.

Which of the following is in an assertion of relevant account balances of a key purchase transaction?

________ systems use an independent third party to settle a business to business (B2B) transaction.

Explain how an Electronic Invoice Presentment and Payment (EIPP) system works and why they are used to settle business to business transactions.

Common documents and files that are found in the process of buying goods include_______.

Key assertions relating to accounts payable account balances are _______.

When reviewing the results of analytical procedures, the auditor needs to bring an appropriate level of _______.

A ________is a form showing the description, quantity, and other data pertaining to the goods the vendor has authorized the purchaser to return.It serves as the basis for initiating the purchase return.

The purchasing or procurement process typically involves _______.

Steps used in developing an audit strategy for management assertions include _______.

Which of the following is important for the auditor to understand before proceeding with an audit of the payroll process?

Prior experience in accounts payable turnover days combined with knowledge of current purchases can be useful in estimating current payables.

The category of misstatements relevant to the purchasing and payroll cycles that consists of error or irregularities in approach, theory, or calculation associated with the expensing of assets or understatement of liabilities is ______.

Payroll fraud may occur in which of the following ways?

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

Which two of the following are involved in recording cash disbursements?

Purchasing/procurement is concerned with _______.

The quality of entity level controls is important to _______.

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