Question 1

Which cycle is not directly linked to the production cycle?

Accepted Answer

A) Acquisition and expenditure cycle. 
B) Payroll cycle. 
C) Revenue and collection cycle. 
D) Finance and investment cycle. 
A) Acquisition and expenditure cycle. 
B) Payroll cycle. 
C) Revenue and collection cycle. 
D) Finance and investment cycle.

Question 2

From the auditors' point of view, inventory counts are more acceptable prior to the year end when

Accepted Answer

A) internal control is weak. 
B) accurate perpetual inventory records are maintained. 
C) inventory is slow moving. 
D) significant amounts of inventory are held on a consignment basis. 
A) internal control is weak. 
B) accurate perpetual inventory records are maintained. 
C) inventory is slow moving. 
D) significant amounts of inventory are held on a consignment basis.

Question 3

An auditor selected an inventory item on the warehouse floor, test counted it, and traced the count to the final inventory compilation. The auditor most likely was testing the PCAOB assertion of

Accepted Answer

A) existence. 
B) valuation. 
C) completeness. 
D) rights and obligations. 
A) existence. 
B) valuation. 
C) completeness. 
D) rights and obligations.

Question 4

The typical functions of the production and conversion includes

Accepted Answer

A) cash payments for raw materials purchased. 
B) inventory planning and control. 
C) purchase requisitioning and purchase ordering for inventory. 
D) receiving of inventory shipments from vendors. 
A) cash payments for raw materials purchased. 
B) inventory planning and control. 
C) purchase requisitioning and purchase ordering for inventory. 
D) receiving of inventory shipments from vendors.

Question 5

A material error or fraud in inventory typically has a _______ on financial statements.

Accepted Answer

The answer of A material error or fraud in inventory...

Question 6

An auditor would vouch inventory on the inventory status report to the vendor's invoice to obtain evidence concerning management's balance assertions about

Accepted Answer

A) existence. 
B) rights and obligations. 
C) completeness. 
D) valuation. 
A) existence. 
B) rights and obligations. 
C) completeness. 
D) valuation.

Question 7

A client's physical count of inventories was higher than the inventory quantities shown in the perpetual records. This situation could be the result of the failure to record

Accepted Answer

A) sales. 
B) sales discounts. 
C) purchases. 
D) purchase discounts. 
A) sales. 
B) sales discounts. 
C) purchases. 
D) purchase discounts.

Question 8

Audit planning requires that the auditor consider possible inventory errors or frauds that might occur that could affect the financial statements. For each of the types of inventory errors listed in the following table, indicate what would be the possible effect in the inventory and cost of sales accounts: overstated, understated, or no effect.

Accepted Answer

@#IMG-DLM& a. If book inventory is adjusted to agr

Question 9

An auditor most likely would make inquiries of production and sales personnel concerning possible obsolete or slow-moving inventory to support management's financial statement (PCAOB) assertion of

Accepted Answer

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

Question 10

The function of _______ refers to comparing the physical count of inventory to the perpetual inventory records.

Accepted Answer

periodic r

Question 11

When a production plan is complete the production planner needs to determine

Accepted Answer

A) what raw materials need to be ordered. 
B) labor rates for the jobs are needed to produce the orders. 
C) which vendors need to supply raw materials. 
D) what equipment needs to be purchased to meet production quotas. 
A) what raw materials need to be ordered. 
B) labor rates for the jobs are needed to produce the orders. 
C) which vendors need to supply raw materials. 
D) what equipment needs to be purchased to meet production quotas.

Question 12

Prepare an audit plan for inventory pricing and compilation.

Accepted Answer

Note that other answers are possible.1.O

Question 13

Your client plans to count inventory at several locations on the same day. No location is material in amount, but the total of inventory is quite material. How is an auditor likely to plan to observe?

Accepted Answer

A) Observe all counts at all locations by using the required number of auditors. 
B) Insist the inventory be counted on separate days so the auditor can be present at all locations. 
C) Work with the client to determine which locations to observe. 
D) Observe a sample of locations on a surprise basis. 
A) Observe all counts at all locations by using the required number of auditors. 
B) Insist the inventory be counted on separate days so the auditor can be present at all locations. 
C) Work with the client to determine which locations to observe. 
D) Observe a sample of locations on a surprise basis.

Question 14

A production order usually includes a _______.

Accepted Answer

The answer of A production order usually includes a _______....

Question 15

Counting different parts of inventory at different times of the year is called

Accepted Answer

A) LIFO inventory. 
B) inventory cutoff. 
C) cycle counting. 
D) just-in-time inventory. 
A) LIFO inventory. 
B) inventory cutoff. 
C) cycle counting. 
D) just-in-time inventory.

Question 16

A sample from the perpetual inventory records meets the _______ requirement to determine whether all recorded transactions are supported by reports and documents.

Accepted Answer

The answer of A sample from the perpetual inventory records...

Question 17

Selecting inventory from locations on the warehouse floor, obtaining a test count, and tracing the count to the final inventory compilation produces evidence for the _______ ASB balance assertion.

Accepted Answer

The answer of Selecting inventory from locations on the warehouse...

Question 18

_______ are used by the purchasing department to place orders for materials.

Accepted Answer

Material r

Question 19

Counting inventory on the warehouse floor and tracing the count to the inventory compilation provides evidence to support which management (PCAOB) assertion?

Accepted Answer

A) Existence or occurrence. 
B) Completeness. 
C) Rights and obligations. 
D) Valuation or allocation. 
A) Existence or occurrence. 
B) Completeness. 
C) Rights and obligations. 
D) Valuation or allocation.

Question 20

An auditor is examining a nonpublic company's inventory procurement system and has decided to perform tests of controls. Under which of the following conditions should the auditor perform tests of controls?

Accepted Answer

A) Significant weaknesses were found in the company's internal control. 
B) The auditor hopes to reduce the amount of work to be done in assessing inherent risk. 
C) The auditor believes that testing the controls could lead to a reduction in overall audit time and cost. 
D) Tests of controls are always performed when the auditor begins to assess control risk. 
A) Significant weaknesses were found in the company's internal control. 
B) The auditor hopes to reduce the amount of work to be done in assessing inherent risk. 
C) The auditor believes that testing the controls could lead to a reduction in overall audit time and cost. 
D) Tests of controls are always performed when the auditor begins to assess control risk.

Which cycle is not directly linked to the production cycle?

From the auditors' point of view, inventory counts are more acceptable prior to the year end when

An auditor selected an inventory item on the warehouse floor, test counted it, and traced the count to the final inventory compilation. The auditor most likely was testing the PCAOB assertion of

The typical functions of the production and conversion includes

A material error or fraud in inventory typically has a _______ on financial statements.

An auditor would vouch inventory on the inventory status report to the vendor's invoice to obtain evidence concerning management's balance assertions about

A client's physical count of inventories was higher than the inventory quantities shown in the perpetual records. This situation could be the result of the failure to record

An auditor most likely would make inquiries of production and sales personnel concerning possible obsolete or slow-moving inventory to support management's financial statement (PCAOB) assertion of

The function of _______ refers to comparing the physical count of inventory to the perpetual inventory records.

When a production plan is complete the production planner needs to determine

Prepare an audit plan for inventory pricing and compilation.

Your client plans to count inventory at several locations on the same day. No location is material in amount, but the total of inventory is quite material. How is an auditor likely to plan to observe?

A production order usually includes a _______.

Counting different parts of inventory at different times of the year is called

A sample from the perpetual inventory records meets the _______ requirement to determine whether all recorded transactions are supported by reports and documents.

Selecting inventory from locations on the warehouse floor, obtaining a test count, and tracing the count to the final inventory compilation produces evidence for the _______ ASB balance assertion.

_______ are used by the purchasing department to place orders for materials.

Counting inventory on the warehouse floor and tracing the count to the inventory compilation provides evidence to support which management (PCAOB) assertion?

An auditor is examining a nonpublic company's inventory procurement system and has decided to perform tests of controls. Under which of the following conditions should the auditor perform tests of controls?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash 227

Revenue and Collection Cycle 279

Acquisition and Expenditure Cycle 336

Finance and Investment Cycle 443

Completing the Audit 500

Reports on Audited Financial Statements

Filters

Exam 9: Production Cycle 394

Which cycle is not directly linked to the production cycle?

From the auditors' point of view, inventory counts are more acceptable prior to the year end when

An auditor selected an inventory item on the warehouse floor, test counted it, and traced the count to the final inventory compilation. The auditor most likely was testing the PCAOB assertion of

The typical functions of the production and conversion includes

A material error or fraud in inventory typically has a _______ on financial statements.

An auditor would vouch inventory on the inventory status report to the vendor's invoice to obtain evidence concerning management's balance assertions about

A client's physical count of inventories was higher than the inventory quantities shown in the perpetual records. This situation could be the result of the failure to record

An auditor most likely would make inquiries of production and sales personnel concerning possible obsolete or slow-moving inventory to support management's financial statement (PCAOB) assertion of

The function of _______ refers to comparing the physical count of inventory to the perpetual inventory records.

When a production plan is complete the production planner needs to determine

Prepare an audit plan for inventory pricing and compilation.

Your client plans to count inventory at several locations on the same day. No location is material in amount, but the total of inventory is quite material. How is an auditor likely to plan to observe?

A production order usually includes a _______.

Counting different parts of inventory at different times of the year is called

A sample from the perpetual inventory records meets the _______ requirement to determine whether all recorded transactions are supported by reports and documents.

Selecting inventory from locations on the warehouse floor, obtaining a test count, and tracing the count to the final inventory compilation produces evidence for the _______ ASB balance assertion.

_______ are used by the purchasing department to place orders for materials.

Counting inventory on the warehouse floor and tracing the count to the inventory compilation provides evidence to support which management (PCAOB) assertion?

An auditor is examining a nonpublic company's inventory procurement system and has decided to perform tests of controls. Under which of the following conditions should the auditor perform tests of controls?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash 227

Revenue and Collection Cycle 279

Acquisition and Expenditure Cycle 336

Finance and Investment Cycle 443

Completing the Audit 500

Reports on Audited Financial Statements

Filters