Question 1

Understanding the significance of the purchasing cycle to the entity _______.

Accepted Answer

A) provides a context for important risk assessments 
B) helps the auditor to understand if the entity is overstaffed or understaffed 
C) has important implications on the financing cycle 
D) is of only peripheral importance to the auditor, due to its extremely low risk assessment. 
A) provides a context for important risk assessments 
B) helps the auditor to understand if the entity is overstaffed or understaffed 
C) has important implications on the financing cycle 
D) is of only peripheral importance to the auditor, due to its extremely low risk assessment.

Question 2

Goods in transit shipped FOB (free-on-board) destination should _______.

Accepted Answer

A) remain in the inventory of the buyer and be excluded from the purchaser's inventory and accounts payable until arrival at the purchasing entity's receiving department. 
B) remain in the inventory of the seller and be excluded from the purchaser's inventory and accounts payable until arrival at the purchasing entity's receiving department. 
C) remain in the inventory of the buyer and be included from the purchaser's inventory and accounts payable until arrival at the purchasing entity's receiving department. 
D) remain in the inventory of the seller and be included from the purchaser's inventory and accounts payable until arrival at the purchasing entity's receiving department. 
A) remain in the inventory of the buyer and be excluded from the purchaser's inventory and accounts payable until arrival at the purchasing entity's receiving department. 
B) remain in the inventory of the seller and be excluded from the purchaser's inventory and accounts payable until arrival at the purchasing entity's receiving department. 
C) remain in the inventory of the buyer and be included from the purchaser's inventory and accounts payable until arrival at the purchasing entity's receiving department. 
D) remain in the inventory of the seller and be included from the purchaser's inventory and accounts payable until arrival at the purchasing entity's receiving department.

Question 3

Many frauds can be avoided with strong controls over the vendor master files, determining the appropriateness of support for payments to vendors before recording a liability (voucher), and the willingness to dispute inappropriate items with vendors.

Accepted Answer

A) True 
 B)False

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.You now need to identify what could go wrong.Identify at least three risks (what could go wrong) for paying the liability and recording cash disbursements.
,

Accepted Answer

The answer of You are a senior auditor on a...

Question 5

Which of the following assertions is tested by comparing information on the cash disbursements journal with the related voucher information?

Accepted Answer

A) Classification of cash disbursements 
B) Cutoff of cash disbursements 
C) Completeness of cash disbursements 
D) Completeness, existence, and valuation of cash balances 
A) Classification of cash disbursements 
B) Cutoff of cash disbursements 
C) Completeness of cash disbursements 
D) Completeness, existence, and valuation of cash balances

Question 6

Which of the following is a form showing the description, quantity, and other data pertaining to the goods the vendor has authorized the purchaser to return?

Accepted Answer

A) Purchase return authorization 
B) Report return authorization 
C) Return authorization 
D) Form authorization 
A) Purchase return authorization 
B) Report return authorization 
C) Return authorization 
D) Form authorization

Question 7

The procurement process involves selecting vendors, establishing payment terms, negotiating contracts, purchasing goods, receiving goods, and recording of purchases and _______.

Accepted Answer

payment of

Question 8

Which of the following refer to making payments?

Accepted Answer

A) Cash disbursement transactions 
B) Transactions 
C) Net sale transactions 
D) Purchase adjustments 
A) Cash disbursement transactions 
B) Transactions 
C) Net sale transactions 
D) Purchase adjustments

Question 9

Auditors often use test data on programmed application controls _______.

Accepted Answer

A) to determine how likely the system is to hacking and phishing attempts 
B) to ensure expected results do not appear on exception reports 
C) to determine whether expected results appear on exception reports 
D) as a way to enter dummy transactions designed to increase audit fees 
A) to determine how likely the system is to hacking and phishing attempts 
B) to ensure expected results do not appear on exception reports 
C) to determine whether expected results appear on exception reports 
D) as a way to enter dummy transactions designed to increase audit fees

Question 10

Which three of the following are assertions of relevant transaction classes which belong to the key purchasing cycle assertion?

Accepted Answer

A) Occurrence 
B) Completeness 
C) Accuracy 
D) Rights and obligations 
A) Occurrence 
B) Completeness 
C) Accuracy 
D) Rights and obligations

Question 11

Which of the following is a key payroll process assertion for relevant transaction classes?

Accepted Answer

A) Valuation 
B) Existence 
C) Accuracy 
D) All of the answer choices are correct. 
A) Valuation 
B) Existence 
C) Accuracy 
D) All of the answer choices are correct.

Question 12

With respect to the purchasing cycle, it is particularly important for the auditor _______.

Accepted Answer

A) to closely check the revenue and associated contra-revenue accounts 
B) to be knowledgeable about the entity, the types of sales the entity makes, and how those sales support the earnings generation of the entity 
C) to be knowledgeable about the entity, the types of purchases the entity makes, and how those purchases support the earnings generation of the entity 
D) to determine the net realizable value of accounts receivable 
A) to closely check the revenue and associated contra-revenue accounts 
B) to be knowledgeable about the entity, the types of sales the entity makes, and how those sales support the earnings generation of the entity 
C) to be knowledgeable about the entity, the types of purchases the entity makes, and how those purchases support the earnings generation of the entity 
D) to determine the net realizable value of accounts receivable

Question 13

Many Evaluated Receipt Systems (ERS) use Electronic Invoice Presentment and Payment (EIPP) systems.

Accepted Answer

A) True 
 B)False

Question 14

You are the auditor of Swanson Glass, Inc., a manufacturer of glass vases.Your intern has asked for clarification on the controls over the purchase returns and allowances for Swanson Glass.Provide your intern with an example of two control activities useful in reducing the risk of misstatements over purchase returns and allowances, focusing on the occurrence of such transactions.

Accepted Answer

Student answers will vary.
Control activ

Question 15

All of the following are key payroll process assertions for relevant account balances, EXCEPT _______.

Accepted Answer

A) occurrence 
B) existence 
C) completeness 
D) rights and obligations 
A) occurrence 
B) existence 
C) completeness 
D) rights and obligations

Question 16

Often vendors will send a _______ showing the beginning payable balance, transactions during the month, and the ending payable balance.

Accepted Answer

The answer of Often vendors will send a _______ showing...

Question 17

Kickbacks and bid rigging typically involve _______.

Accepted Answer

A) collusion between an employee and a customer 
B) collusion between an employee and a vendor 
C) paying for the same item twice 
D) invoices that are submitted for services not received by the entity 
A) collusion between an employee and a customer 
B) collusion between an employee and a vendor 
C) paying for the same item twice 
D) invoices that are submitted for services not received by the entity

Question 18

Determining that accrued payroll payables are the obligations of the entity is an example of which of the following?

Accepted Answer

A) Substantive analytical procedures 
B) Tests of details of transactions 
C) Tests of details of balances 
D) Audit data analytics 
A) Substantive analytical procedures 
B) Tests of details of transactions 
C) Tests of details of balances 
D) Audit data analytics

Question 19

There should be adequate segregation of duties between _______.

Accepted Answer

A) obtaining authorization for purchase returns, shipping goods, and recording debit memos 
B) obtaining authorization for purchase returns, selling goods, and recording debit memos 
C) obtaining authorization for purchase returns, shipping goods, and recording credit memos 
D) obtaining authorization for purchase returns, selling goods, and recording payables memos 
A) obtaining authorization for purchase returns, shipping goods, and recording debit memos 
B) obtaining authorization for purchase returns, selling goods, and recording debit memos 
C) obtaining authorization for purchase returns, shipping goods, and recording credit memos 
D) obtaining authorization for purchase returns, selling goods, and recording payables memos

Question 20

All of the following controls relate to the process of preparing payroll, EXCEPT:

Accepted Answer

A) Information from electronic time cards should be forwarded to the supervisor for review and electronic approval. 
B) Before processing, the payroll program should check the employee name and payroll rates against the employee master file. 
C) The payroll program places a limit test on hours worked or gross payroll expenses. 
D) All of the answer choices are correct. 
A) Information from electronic time cards should be forwarded to the supervisor for review and electronic approval. 
B) Before processing, the payroll program should check the employee name and payroll rates against the employee master file. 
C) The payroll program places a limit test on hours worked or gross payroll expenses. 
D) All of the answer choices are correct.

Understanding the significance of the purchasing cycle to the entity _______.

Goods in transit shipped FOB (free-on-board) destination should _______.

Many frauds can be avoided with strong controls over the vendor master files, determining the appropriateness of support for payments to vendors before recording a liability (voucher), and the willingness to dispute inappropriate items with vendors.

Which of the following assertions is tested by comparing information on the cash disbursements journal with the related voucher information?

Which of the following is a form showing the description, quantity, and other data pertaining to the goods the vendor has authorized the purchaser to return?

The procurement process involves selecting vendors, establishing payment terms, negotiating contracts, purchasing goods, receiving goods, and recording of purchases and _______.

Which of the following refer to making payments?

Auditors often use test data on programmed application controls _______.

Which three of the following are assertions of relevant transaction classes which belong to the key purchasing cycle assertion?

Which of the following is a key payroll process assertion for relevant transaction classes?

With respect to the purchasing cycle, it is particularly important for the auditor _______.

Many Evaluated Receipt Systems (ERS) use Electronic Invoice Presentment and Payment (EIPP) systems.

All of the following are key payroll process assertions for relevant account balances, EXCEPT _______.

Often vendors will send a _______ showing the beginning payable balance, transactions during the month, and the ending payable balance.

Kickbacks and bid rigging typically involve _______.

Determining that accrued payroll payables are the obligations of the entity is an example of which of the following?

There should be adequate segregation of duties between _______.

All of the following controls relate to the process of preparing payroll, EXCEPT:

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

Understanding the significance of the purchasing cycle to the entity _______.

Goods in transit shipped FOB (free-on-board) destination should _______.

Many frauds can be avoided with strong controls over the vendor master files, determining the appropriateness of support for payments to vendors before recording a liability (voucher), and the willingness to dispute inappropriate items with vendors.

Which of the following assertions is tested by comparing information on the cash disbursements journal with the related voucher information?

Which of the following is a form showing the description, quantity, and other data pertaining to the goods the vendor has authorized the purchaser to return?

The procurement process involves selecting vendors, establishing payment terms, negotiating contracts, purchasing goods, receiving goods, and recording of purchases and _______.

Which of the following refer to making payments?

Auditors often use test data on programmed application controls _______.

Which three of the following are assertions of relevant transaction classes which belong to the key purchasing cycle assertion?

Which of the following is a key payroll process assertion for relevant transaction classes?

With respect to the purchasing cycle, it is particularly important for the auditor _______.

Many Evaluated Receipt Systems (ERS) use Electronic Invoice Presentment and Payment (EIPP) systems.

All of the following are key payroll process assertions for relevant account balances, EXCEPT _______.

Often vendors will send a _______ showing the beginning payable balance, transactions during the month, and the ending payable balance.

Kickbacks and bid rigging typically involve _______.

Determining that accrued payroll payables are the obligations of the entity is an example of which of the following?

There should be adequate segregation of duties between _______.

All of the following controls relate to the process of preparing payroll, EXCEPT:

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