Question 1

On an SEC engagement, an auditor wishes to determine the officers who receive the greatest total compensation. This objective is related primarily to the:

Accepted Answer

A)  existence or occurrence assertion. 
B)  rights and obligations assertion. 
C)  valuation or allocation assertion. 
D)  presentation or disclosure assertion. 
E)  completeness assertion. 
A)  existence or occurrence assertion. 
B)  rights and obligations assertion. 
C)  valuation or allocation assertion. 
D)  presentation or disclosure assertion. 
E)  completeness assertion.

Question 2

The most significant issue associated with incentive compensation plans relates to adequate disclosures in the financial statements.

Accepted Answer

A) True 
 B)False

Question 3

Payroll functions include all of the following except:

Accepted Answer

A)  planning and controlling production. 
B)  preparing the payroll. 
C)  hiring employees. 
D)  protecting unclaimed wages. 
E)  recording the payroll. 
A)  planning and controlling production. 
B)  preparing the payroll. 
C)  hiring employees. 
D)  protecting unclaimed wages. 
E)  recording the payroll.

Question 4

Which of the following accounts would not be directly affected by transactions in the personnel services cycle?

Accepted Answer

A)  manufacturing overhead 
B)  commissions expense 
C)  work in process inventory 
D)  employee federal income taxes withheld 
E)  payroll taxes payable 
A)  manufacturing overhead 
B)  commissions expense 
C)  work in process inventory 
D)  employee federal income taxes withheld 
E)  payroll taxes payable

Question 5

The auditor should review and evaluate the client's inventory-taking plans during the observation of the inventory.

Accepted Answer

A) True 
 B)False

Question 6

Listed below are five assertion categories coded by the letters A through E.
-Inventories are properly stated at the lower of cost or market.

Accepted Answer

A) Completeness 
B) Existence or Occurrence 
C) Rights and Obligations 
D) Valuation or Allocation 
E) Presentation and Disclosure 
A) Completeness 
B) Existence or Occurrence 
C) Rights and Obligations 
D) Valuation or Allocation 
E) Presentation and Disclosure

Question 7

In assessing control risk in the personnel services cycle, of least concern to the auditor is:

Accepted Answer

A)  payments to fictitious employees. 
B)  payments to actual employees for hours not worked. 
C)  failure to pay actual employees for hours worked. 
D)  payment to actual employees at higher than authorized rates. 
E)  payments to actual employees for hours worked. 
A)  payments to fictitious employees. 
B)  payments to actual employees for hours not worked. 
C)  failure to pay actual employees for hours worked. 
D)  payment to actual employees at higher than authorized rates. 
E)  payments to actual employees for hours worked.

Question 8

Match between columns
                        Premises: Inventories included in the balance sheet physically exist.
Inventories and cost of goods sold are properly identified and classified in the financial statements.
The reporting entity has legal title to the inventories at the balance sheet date.
Inventories are properly stated at the lower of cost or market.
Inventories include all materials, products, and supplies on hand at the balance sheet date.

Accepted Answer

The Answer of Completeness and Existence or Occurrence and Rights is...

Question 9

When a significant proportion of inventories is stored in a public warehouse, the auditor may not be satisfied with its existence by merely obtaining a confirmation from the warehouseman.

Accepted Answer

A) True 
 B)False

Question 10

Listed below are five assertion categories coded by the letters A through E.
-Inventories and cost of goods sold are properly identified and classified in the financial statements.

Accepted Answer

A) Completeness 
B) Existence or Occurrence 
C) Rights and Obligations 
D) Valuation or Allocation 
E) Presentation and Disclosure 
A) Completeness 
B) Existence or Occurrence 
C) Rights and Obligations 
D) Valuation or Allocation 
E) Presentation and Disclosure

Question 11

Confirmation of inventories in public warehouses cannot provide evidence concerning the:

Accepted Answer

A)  existence or occurrence assertion. 
B)  completeness assertion. 
C)  rights and obligations assertion. 
D)  presentation or disclosure assertion. 
E)  valuation or allocation assertion. 
A)  existence or occurrence assertion. 
B)  completeness assertion. 
C)  rights and obligations assertion. 
D)  presentation or disclosure assertion. 
E)  valuation or allocation assertion.

Question 12

Which of the following functions is not part of the production cycle?

Accepted Answer

A)  acquisition of raw materials 
B)  processing goods in production 
C)  determining and recording manufacturing costs 
D)  maintaining the correctness of inventory balances 
E)  protecting inventories 
A)  acquisition of raw materials 
B)  processing goods in production 
C)  determining and recording manufacturing costs 
D)  maintaining the correctness of inventory balances 
E)  protecting inventories

Question 13

Most companies structure their stock option plans to meet the requirements of APB No. 25 and use the intrinsic value approach.

Accepted Answer

A) True 
 B)False

Question 14

Observation of inventory does not provide evidence for rights and obligations.

Accepted Answer

A) True 
 B)False

Question 15

To prevent terminated employees from being paid in subsequent periods, prompt notification of employee terminations should be made by the personnel department.

Accepted Answer

A) True 
 B)False

Question 16

A move ticket is a written authorization from a production department for stores to release materials for use on an approved production order.

Accepted Answer

A) True 
 B)False

Question 17

The extent of the auditor's inventory test count would least depend on which of the following?

Accepted Answer

A)  The nature and composition of the inventory. 
B)  The care exercised by client employees in taking the inventory. 
C)  The effectiveness of controls pertaining to maintenance of perpetual records. 
D)  The effectiveness of controls pertaining to the safeguarding of the inventory. 
E)  The existence of inventory at multiple locations. 
A)  The nature and composition of the inventory. 
B)  The care exercised by client employees in taking the inventory. 
C)  The effectiveness of controls pertaining to maintenance of perpetual records. 
D)  The effectiveness of controls pertaining to the safeguarding of the inventory. 
E)  The existence of inventory at multiple locations.

Question 18

A clock card is used to show the hours worked, while the time ticket is used to show the specific jobs worked on during those hours.

Accepted Answer

A) True 
 B)False

Question 19

The auditor normally performs analytical procedures early in the audit of the personnel services cycle because they are cost effective.

Accepted Answer

A) True 
 B)False

Question 20

Completed time tickets and clock cards are sent by:

Accepted Answer

A)  personnel to timekeeping. 
B)  payroll to timekeeping. 
C)  timekeeping to payroll. 
D)  timekeeping to personnel, which forwards them to payroll. 
E)  timekeeping to payroll, which forwards them to personnel. 
A)  personnel to timekeeping. 
B)  payroll to timekeeping. 
C)  timekeeping to payroll. 
D)  timekeeping to personnel, which forwards them to payroll. 
E)  timekeeping to payroll, which forwards them to personnel.

On an SEC engagement, an auditor wishes to determine the officers who receive the greatest total compensation. This objective is related primarily to the:

The most significant issue associated with incentive compensation plans relates to adequate disclosures in the financial statements.

Payroll functions include all of the following except:

Which of the following accounts would not be directly affected by transactions in the personnel services cycle?

The auditor should review and evaluate the client's inventory-taking plans during the observation of the inventory.

Listed below are five assertion categories coded by the letters A through E. -Inventories are properly stated at the lower of cost or market.

In assessing control risk in the personnel services cycle, of least concern to the auditor is:

When a significant proportion of inventories is stored in a public warehouse, the auditor may not be satisfied with its existence by merely obtaining a confirmation from the warehouseman.

Listed below are five assertion categories coded by the letters A through E. -Inventories and cost of goods sold are properly identified and classified in the financial statements.

Confirmation of inventories in public warehouses cannot provide evidence concerning the:

Which of the following functions is not part of the production cycle?

Most companies structure their stock option plans to meet the requirements of APB No. 25 and use the intrinsic value approach.

Observation of inventory does not provide evidence for rights and obligations.

To prevent terminated employees from being paid in subsequent periods, prompt notification of employee terminations should be made by the personnel department.

A move ticket is a written authorization from a production department for stores to release materials for use on an approved production order.

The extent of the auditor's inventory test count would least depend on which of the following?

A clock card is used to show the hours worked, while the time ticket is used to show the specific jobs worked on during those hours.

The auditor normally performs analytical procedures early in the audit of the personnel services cycle because they are cost effective.

Completed time tickets and clock cards are sent by:

Auditing and the Public Accounting

Financial Statement Audits and

Professional Ethics

Auditors Legal Liability

Overview of the Audit Process

Audit Evidence, Audit Objectives,

Accepting the Engagement and

Materiality Decisions and Performing Analytical Procedures

Audit Risk, Including the Risk of Fraud

Understanding Internal Controls

Audit Procedures in Response to Assessed Risks: Tests of Controls

Audit Procedures in Response to Assessed Risks: Substantive Tests

Audit Sampling in Substantive Tests

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Auditing the Investing and

Auditing Investments and

Completing the Audit and Postaudit

Attest and Assurance Services, and Related Reports

Internal, Operational, and

Filters

Exam 16: Auditing the Production and

On an SEC engagement, an auditor wishes to determine the officers who receive the greatest total compensation. This objective is related primarily to the:

The most significant issue associated with incentive compensation plans relates to adequate disclosures in the financial statements.

Payroll functions include all of the following except:

Which of the following accounts would not be directly affected by transactions in the personnel services cycle?

The auditor should review and evaluate the client's inventory-taking plans during the observation of the inventory.

Listed below are five assertion categories coded by the letters A through E. -Inventories are properly stated at the lower of cost or market.

In assessing control risk in the personnel services cycle, of least concern to the auditor is:

When a significant proportion of inventories is stored in a public warehouse, the auditor may not be satisfied with its existence by merely obtaining a confirmation from the warehouseman.

Listed below are five assertion categories coded by the letters A through E. -Inventories and cost of goods sold are properly identified and classified in the financial statements.

Confirmation of inventories in public warehouses cannot provide evidence concerning the:

Which of the following functions is not part of the production cycle?

Most companies structure their stock option plans to meet the requirements of APB No. 25 and use the intrinsic value approach.

Observation of inventory does not provide evidence for rights and obligations.

To prevent terminated employees from being paid in subsequent periods, prompt notification of employee terminations should be made by the personnel department.

A move ticket is a written authorization from a production department for stores to release materials for use on an approved production order.

The extent of the auditor's inventory test count would least depend on which of the following?

A clock card is used to show the hours worked, while the time ticket is used to show the specific jobs worked on during those hours.

The auditor normally performs analytical procedures early in the audit of the personnel services cycle because they are cost effective.

Completed time tickets and clock cards are sent by:

Auditing and the Public Accounting

Financial Statement Audits and

Professional Ethics

Auditors Legal Liability

Overview of the Audit Process

Audit Evidence, Audit Objectives,

Accepting the Engagement and

Materiality Decisions and Performing Analytical Procedures

Audit Risk, Including the Risk of Fraud

Understanding Internal Controls

Audit Procedures in Response to Assessed Risks: Tests of Controls

Audit Procedures in Response to Assessed Risks: Substantive Tests

Audit Sampling in Substantive Tests

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Auditing the Investing and

Auditing Investments and

Completing the Audit and Postaudit

Attest and Assurance Services, and Related Reports

Internal, Operational, and

Filters