Question 1

One of the ways to prevent the use of fictitious vendors to steal company funds is by

Accepted Answer

A) having adequate network access controls to prevent unauthorized access to transaction files. 
B) ensuring that accounts payable programs are available only in source code. 
C) having software automatically check for duplicate invoice numbers before payment. 
D) having authorized personnel carefully scrutinize documentation supporting payments. 
A) having adequate network access controls to prevent unauthorized access to transaction files. 
B) ensuring that accounts payable programs are available only in source code. 
C) having software automatically check for duplicate invoice numbers before payment. 
D) having authorized personnel carefully scrutinize documentation supporting payments. D

Question 2

What are the important controls relating to cash disbursements?

Accepted Answer

The important controls relating to cash disbursements are: 1)The signing of cheques (or authorization of payment release)by an individual with proper authority;
2)Separation of responsibilities for approving the payments and performing the accounts payable function;
3)Careful examination of the supporting documents by the cheque signer at the time the cheque is signed;and
4)Use of a password (preferably two different passwords by two people)before electronic payments are released.

Question 3

The internal control that requires receiving reports to be prenumbered and accounted for satisfies the objective of

Accepted Answer

A) occurrence. 
B) classification. 
C) completeness. 
D) accuracy. 
A) occurrence. 
B) classification. 
C) completeness. 
D) accuracy. C

Question 4

When processing and recording cash disbursements,it is important to have a method of cancelling the supporting documents to prevent their reuse as support for another cheque at a later time.A common method is to

Accepted Answer

A) shred the documents so they can't be reused. 
B) transfer possession of the documents to a bank vault such as a safety deposit box. 
C) move the documents to a permanent off-site facility such as a warehouse. 
D) write the cheque number and payment date on the supporting documents. 
A) shred the documents so they can't be reused. 
B) transfer possession of the documents to a bank vault such as a safety deposit box. 
C) move the documents to a permanent off-site facility such as a warehouse. 
D) write the cheque number and payment date on the supporting documents.

Question 5

The major balance sheet account in the acquisition and payment cycle is

Accepted Answer

A) accounts payable. 
B) purchases. 
C) merchandise inventory. 
D) common stock. 
A) accounts payable. 
B) purchases. 
C) merchandise inventory. 
D) common stock.

Question 6

An important control in the accounts payable and information systems departments is to require that those personnel who record acquisitions do not have access to

Accepted Answer

A) lists of vendors' names and addresses. 
B) cash,marketable securities,and other assets. 
C) vendors' price lists. 
D) the accounts payable master file. 
A) lists of vendors' names and addresses. 
B) cash,marketable securities,and other assets. 
C) vendors' price lists. 
D) the accounts payable master file.

Question 7

The control objective associated with selecting a sample of receiving reports and tracing them to the perpetual inventory records is

Accepted Answer

A) accuracy. 
B) validity. 
C) completeness. 
D) classification. 
A) accuracy. 
B) validity. 
C) completeness. 
D) classification.

Question 8

What are the two factors that the audit strategy depends on for the acquisition and payment cycle?

Accepted Answer

1)Significant risks.

Question 9

What are the risks of error or fraud in the acquisition and payment cycle?

Accepted Answer

The risks of error or fraud in the acqui

Question 10

Which of the following controls help to ensure that the receipt of raw materials for inventory is recorded in the correct period?

Accepted Answer

A) Vendor details are automatically retrieved from the vendor master file. 
B) Receiving staff write down the date goods are received on the bill of lading. 
C) Accounting staff record the date that goods are received in the accounting systems. 
D) The transaction date entered must be the same as the system date. 
A) Vendor details are automatically retrieved from the vendor master file. 
B) Receiving staff write down the date goods are received on the bill of lading. 
C) Accounting staff record the date that goods are received in the accounting systems. 
D) The transaction date entered must be the same as the system date.

Question 11

Many companies have inventory that is easy to steal and is readily marketable.Which of the following controls helps to prevent theft and misuse of inventory?

Accepted Answer

A) physical control of inventory from time of receipt until use 
B) proper access controls over the inventory master and transaction files 
C) dual signatures required on all purchase orders over $10 000 
D) purchase requisitions are to be approved by the production manager 
A) physical control of inventory from time of receipt until use 
B) proper access controls over the inventory master and transaction files 
C) dual signatures required on all purchase orders over $10 000 
D) purchase requisitions are to be approved by the production manager

Question 12

Which of the following situations would indicate increased inherent risk in the accounts payable and acquisition cycle?

Accepted Answer

A) good quality internal controls for cash handling 
B) the use of packaged software for accounting (including accounts payable) 
C) the use of clear,standard terms when negotiating vendor discounts 
D) significant related party transactions 
A) good quality internal controls for cash handling 
B) the use of packaged software for accounting (including accounts payable) 
C) the use of clear,standard terms when negotiating vendor discounts 
D) significant related party transactions

Question 13

Auditor confirmation of accounts payable balances at the balance sheet date may be unnecessary because

Accepted Answer

A) this is a duplication of cutoff tests. 
B) accounts payable balances at the balance sheet date may not be paid before the audit is completed. 
C) correspondence with the audit client's lawyer will reveal all legal action by vendors for nonpayment. 
D) there is likely to be other reliable external evidence available to support the balances. 
A) this is a duplication of cutoff tests. 
B) accounts payable balances at the balance sheet date may not be paid before the audit is completed. 
C) correspondence with the audit client's lawyer will reveal all legal action by vendors for nonpayment. 
D) there is likely to be other reliable external evidence available to support the balances.

Question 14

One of the ways to prevent the use of fictitious vendors to steal company funds is to

Accepted Answer

A) have adequate network access controls to prevent unauthorized access to transaction files. 
B) ensure that accounts payable programs are available only in source code. 
C) establish controls to establish only approved vendors. 
D) reconcile the accounts payable trial balance to the general ledger. 
A) have adequate network access controls to prevent unauthorized access to transaction files. 
B) ensure that accounts payable programs are available only in source code. 
C) establish controls to establish only approved vendors. 
D) reconcile the accounts payable trial balance to the general ledger.

Question 15

The statement that items on the accounts payable register must be supported by a completed voucher package containing a services purchase order and evidence the service was provided is a specific example of which control objective?

Accepted Answer

A) accuracy 
B) completeness 
C) validity 
D) presentation and disclosure 
A) accuracy 
B) completeness 
C) validity 
D) presentation and disclosure

Question 16

The tests of details of balances procedure for manufacturing equipment that requires the auditor to examine vendors' invoices of closely related accounts (such as repairs and maintenance)to uncover items that should be manufacturing equipment would satisfy the audit objective of

Accepted Answer

A) detail tie-in. 
B) existence. 
C) classification. 
D) accuracy. 
A) detail tie-in. 
B) existence. 
C) classification. 
D) accuracy.

Question 17

When an acquisition is on an FOB (freight on board)origin basis,the inventory and related accounts payable must be recorded in the current period if the goods were

Accepted Answer

A) received prior to the balance sheet date. 
B) shipped prior to the balance sheet date. 
C) both shipped and received prior to the balance sheet date. 
D) paid for. 
A) received prior to the balance sheet date. 
B) shipped prior to the balance sheet date. 
C) both shipped and received prior to the balance sheet date. 
D) paid for.

Question 18

Segregation of duties has an important role in providing for good quality internal controls.Which of the following segregation of duties improve controls over the inventory and distribution cycle?

Accepted Answer

A) The purchasing department should not be responsible for updating the economic order quantity. 
B) The accounting staff should not be responsible for the data entry of vendor invoice detail. 
C) The inventory transaction processing systems should not be accessible to the receiving department. 
D) The purchasing department should not be responsible for authorizing the acquisition of or receiving the goods. 
A) The purchasing department should not be responsible for updating the economic order quantity. 
B) The accounting staff should not be responsible for the data entry of vendor invoice detail. 
C) The inventory transaction processing systems should not be accessible to the receiving department. 
D) The purchasing department should not be responsible for authorizing the acquisition of or receiving the goods.

Question 19

A)Describe each of the four business functions that comprise the acquisition and payment cycle.B)Describe the key documents used in processing purchase orders for the acquisitions and payment cycle.C)Discuss the key documents and records used in recognizing the liability function in the acquisitions and payment cycle.

Accepted Answer

A)The four business functions that compr

Question 20

The internal control that requires an "independent verification of calculations and amounts" satisfies the objective of

Accepted Answer

A) occurrence. 
B) completeness. 
C) accuracy. 
D) posting and summarization. 
A) occurrence. 
B) completeness. 
C) accuracy. 
D) posting and summarization.

One of the ways to prevent the use of fictitious vendors to steal company funds is by

What are the important controls relating to cash disbursements?

The internal control that requires receiving reports to be prenumbered and accounted for satisfies the objective of

When processing and recording cash disbursements,it is important to have a method of cancelling the supporting documents to prevent their reuse as support for another cheque at a later time.A common method is to

The major balance sheet account in the acquisition and payment cycle is

An important control in the accounts payable and information systems departments is to require that those personnel who record acquisitions do not have access to

The control objective associated with selecting a sample of receiving reports and tracing them to the perpetual inventory records is

What are the two factors that the audit strategy depends on for the acquisition and payment cycle?

What are the risks of error or fraud in the acquisition and payment cycle?

Which of the following controls help to ensure that the receipt of raw materials for inventory is recorded in the correct period?

Many companies have inventory that is easy to steal and is readily marketable.Which of the following controls helps to prevent theft and misuse of inventory?

Which of the following situations would indicate increased inherent risk in the accounts payable and acquisition cycle?

Auditor confirmation of accounts payable balances at the balance sheet date may be unnecessary because

One of the ways to prevent the use of fictitious vendors to steal company funds is to

The statement that items on the accounts payable register must be supported by a completed voucher package containing a services purchase order and evidence the service was provided is a specific example of which control objective?

The tests of details of balances procedure for manufacturing equipment that requires the auditor to examine vendors' invoices of closely related accounts (such as repairs and maintenance)to uncover items that should be manufacturing equipment would satisfy the audit objective of

When an acquisition is on an FOB (freight on board)origin basis,the inventory and related accounts payable must be recorded in the current period if the goods were

Segregation of duties has an important role in providing for good quality internal controls.Which of the following segregation of duties improve controls over the inventory and distribution cycle?

The internal control that requires an "independent verification of calculations and amounts" satisfies the objective of

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Develop Risk Response: Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters

Exam 13: Audit of the Acquisition and Payment Cycle

One of the ways to prevent the use of fictitious vendors to steal company funds is by

What are the important controls relating to cash disbursements?

The internal control that requires receiving reports to be prenumbered and accounted for satisfies the objective of

When processing and recording cash disbursements,it is important to have a method of cancelling the supporting documents to prevent their reuse as support for another cheque at a later time.A common method is to

The major balance sheet account in the acquisition and payment cycle is

An important control in the accounts payable and information systems departments is to require that those personnel who record acquisitions do not have access to

The control objective associated with selecting a sample of receiving reports and tracing them to the perpetual inventory records is

What are the two factors that the audit strategy depends on for the acquisition and payment cycle?

What are the risks of error or fraud in the acquisition and payment cycle?

Which of the following controls help to ensure that the receipt of raw materials for inventory is recorded in the correct period?

Many companies have inventory that is easy to steal and is readily marketable.Which of the following controls helps to prevent theft and misuse of inventory?

Which of the following situations would indicate increased inherent risk in the accounts payable and acquisition cycle?

Auditor confirmation of accounts payable balances at the balance sheet date may be unnecessary because

One of the ways to prevent the use of fictitious vendors to steal company funds is to

The statement that items on the accounts payable register must be supported by a completed voucher package containing a services purchase order and evidence the service was provided is a specific example of which control objective?

The tests of details of balances procedure for manufacturing equipment that requires the auditor to examine vendors' invoices of closely related accounts (such as repairs and maintenance)to uncover items that should be manufacturing equipment would satisfy the audit objective of

When an acquisition is on an FOB (freight on board)origin basis,the inventory and related accounts payable must be recorded in the current period if the goods were

Segregation of duties has an important role in providing for good quality internal controls.Which of the following segregation of duties improve controls over the inventory and distribution cycle?

The internal control that requires an "independent verification of calculations and amounts" satisfies the objective of

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Develop Risk Response: Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters