Question 1

When goods are received, adequate control requires examination for:

Accepted Answer

A)  quantity. 
B)  description. 
C)  condition. 
D)  all of the above 
A)  quantity. 
B)  description. 
C)  condition. 
D)  all of the above D

Question 2

When a physical count of inventory is performed at an interim date, the auditor observes it at that time and tests the perpetuals for transactions:

Accepted Answer

A)  from the date of the count to year-end. 
B)  throughout the year. 
C)  which are a representative sample of the period under audit. 
D)  from the date of the count to the end of the audit field work. 
A)  from the date of the count to year-end. 
B)  throughout the year. 
C)  which are a representative sample of the period under audit. 
D)  from the date of the count to the end of the audit field work. A

Question 3

A company failed to record an acquisition of merchandise and its attendant liability, but it was included in the physical count of ending inventory.The effect on the financial statements would be to:

Accepted Answer

A)  overstate net income and owners' equity. 
B)  understate assets and owners' equity. 
C)  understate both assets and liabilities. 
D)  understate liabilities and overstate both net income and owners' equity. 
A)  overstate net income and owners' equity. 
B)  understate assets and owners' equity. 
C)  understate both assets and liabilities. 
D)  understate liabilities and overstate both net income and owners' equity. D

Question 4

Which document indicates the time an employee started and stopped working each day as well as the number of hours worked?

Accepted Answer

A)  time ticket 
B)  payroll master file 
C)  rate authorisation form 
D)  job time card 
A)  time ticket 
B)  payroll master file 
C)  rate authorisation form 
D)  job time card

Question 5

The primary concern in testing payroll-related liabilities is to make sure that:

Accepted Answer

A)  accruals are properly valued. 
B)  there are no understated or omitted accruals. 
C)  the accruals are not overstated. 
D)  transactions are recorded in the proper period. 
A)  accruals are properly valued. 
B)  there are no understated or omitted accruals. 
C)  the accruals are not overstated. 
D)  transactions are recorded in the proper period.

Question 6

Why does the auditor recount the client's inventory?

Accepted Answer

A)  to ensure that none is lost or intentionally omitted (completeness) 
B)  to obtain proper cutoff information for sales and acquisitions (cutoff) 
C)  to confirm that inventory as recorded on tags exists (existence) 
D)  to ensure that inventory is counted accurately (accuracy) 
A)  to ensure that none is lost or intentionally omitted (completeness) 
B)  to obtain proper cutoff information for sales and acquisitions (cutoff) 
C)  to confirm that inventory as recorded on tags exists (existence) 
D)  to ensure that inventory is counted accurately (accuracy)

Question 7

Which one of the following statements is NOT correct?

Accepted Answer

A)  Internal controls vary from company to company; therefore, the auditor must identify the controls and deficiencies for each organisation. 
B)  The substantive tests of transactions will vary depending on the assessed control risk. 
C)  The tests of controls and substantive tests of transactions are combined where appropriate. 
D)  The auditor must perform tests of controls on all of the client's internal controls. 
A)  Internal controls vary from company to company; therefore, the auditor must identify the controls and deficiencies for each organisation. 
B)  The substantive tests of transactions will vary depending on the assessed control risk. 
C)  The tests of controls and substantive tests of transactions are combined where appropriate. 
D)  The auditor must perform tests of controls on all of the client's internal controls.

Question 8

The audit procedure 'test clerical accuracy by footing the journals and tracing postings to general ledger and to accounts payable and inventory master files' is used to test the posting and summarisation objective for acquisitions.

Accepted Answer

A) True 
 B)False

Question 9

What is the auditor's main concern when examining payroll transactions?

Accepted Answer

A)  posting of gross payroll amounts to incorrect salary expense accounts 
B)  excess withholding of amounts required to be withheld 
C)  misfootings of employee time records 
D)  overpayments and unauthorised payments 
A)  posting of gross payroll amounts to incorrect salary expense accounts 
B)  excess withholding of amounts required to be withheld 
C)  misfootings of employee time records 
D)  overpayments and unauthorised payments

Question 10

'Recorded payroll payments are for work actually performed by non-fictitious employees' is which transaction-related audit objective for payroll?

Accepted Answer

A)  completeness 
B)  authorisation 
C)  existence 
D)  accuracy 
A)  completeness 
B)  authorisation 
C)  existence 
D)  accuracy

Question 11

A formal review and reporting of obsolete, slow-moving, damaged, and overstated inventory items:

Accepted Answer

A)  is an internal control designed to prevent the overstatement of inventory through the inclusion of obsolete inventory. 
B)  involves reviewing perpetual inventory master files for inventory turnover and holding discussions with engineering or production personnel. 
C)  should be done by a competent employee. 
D)  all of the above 
A)  is an internal control designed to prevent the overstatement of inventory through the inclusion of obsolete inventory. 
B)  involves reviewing perpetual inventory master files for inventory turnover and holding discussions with engineering or production personnel. 
C)  should be done by a competent employee. 
D)  all of the above

Question 12

The auditor's transaction-related audit objective for acquisitions, to determine that recorded acquisitions are for goods and services received, relates to which accounting concept?

Accepted Answer

A)  existence 
B)  completeness 
C)  accuracy 
D)  authorisation 
A)  existence 
B)  completeness 
C)  accuracy 
D)  authorisation

Question 13

Which one of the following is NOT an element of the audit of the inventory and warehousing cycle?

Accepted Answer

A)  Review timekeeping procedures for manufacturing employees. 
B)  Physically observe inventory. 
C)  Check how goods are shipped and revenue and costs are recorded. 
D)  Price and compile inventory. 
A)  Review timekeeping procedures for manufacturing employees. 
B)  Physically observe inventory. 
C)  Check how goods are shipped and revenue and costs are recorded. 
D)  Price and compile inventory.

Question 14

A file recording payroll transactions for each employee and maintaining total wages paid for year to date is the:

Accepted Answer

A)  summary payroll report. 
B)  payroll master file. 
C)  deduction authorisation form. 
D)  rate authorisation form. 
A)  summary payroll report. 
B)  payroll master file. 
C)  deduction authorisation form. 
D)  rate authorisation form.

Question 15

Performing the physical count of inventory on a cycle basis throughout the year is acceptable for both perpetual and periodic inventory systems.

Accepted Answer

A) True 
 B)False

Question 16

The file for recording each payroll transaction for each employee and maintaining total employee wages paid for the year to date is the:

Accepted Answer

A)  payroll journal. 
B)  summary payroll report. 
C)  payroll master file. 
D)  job time ticket. 
A)  payroll journal. 
B)  summary payroll report. 
C)  payroll master file. 
D)  job time ticket.

Question 17

When auditing the payroll and personnel cycle, tests of controls are rarely performed.

Accepted Answer

A) True 
 B)False

Question 18

From an audit perspective, transactions are far more significant than related balance sheet accounts in the payroll and personnel cycle.

Accepted Answer

A) True 
 B)False

Question 19

Identify three analytical procedures commonly used when auditing accounts in the inventory and warehousing cycle.

Accepted Answer

Common analytical procedures for the inv

Question 20

Sample size in physical observation of inventory is:

Accepted Answer

A)  determined using dollar-unit sampling. 
B)  impossible to specify in units because the emphasis is on observing the client's procedures. 
C)  determined using variables sampling. 
D)  determined using attributes sampling. 
A)  determined using dollar-unit sampling. 
B)  impossible to specify in units because the emphasis is on observing the client's procedures. 
C)  determined using variables sampling. 
D)  determined using attributes sampling.

When goods are received, adequate control requires examination for:

When a physical count of inventory is performed at an interim date, the auditor observes it at that time and tests the perpetuals for transactions:

A company failed to record an acquisition of merchandise and its attendant liability, but it was included in the physical count of ending inventory.The effect on the financial statements would be to:

Which document indicates the time an employee started and stopped working each day as well as the number of hours worked?

The primary concern in testing payroll-related liabilities is to make sure that:

Why does the auditor recount the client's inventory?

Which one of the following statements is NOT correct?

The audit procedure 'test clerical accuracy by footing the journals and tracing postings to general ledger and to accounts payable and inventory master files' is used to test the posting and summarisation objective for acquisitions.

What is the auditor's main concern when examining payroll transactions?

'Recorded payroll payments are for work actually performed by non-fictitious employees' is which transaction-related audit objective for payroll?

A formal review and reporting of obsolete, slow-moving, damaged, and overstated inventory items:

The auditor's transaction-related audit objective for acquisitions, to determine that recorded acquisitions are for goods and services received, relates to which accounting concept?

Which one of the following is NOT an element of the audit of the inventory and warehousing cycle?

A file recording payroll transactions for each employee and maintaining total wages paid for year to date is the:

Performing the physical count of inventory on a cycle basis throughout the year is acceptable for both perpetual and periodic inventory systems.

The file for recording each payroll transaction for each employee and maintaining total employee wages paid for the year to date is the:

When auditing the payroll and personnel cycle, tests of controls are rarely performed.

From an audit perspective, transactions are far more significant than related balance sheet accounts in the payroll and personnel cycle.

Identify three analytical procedures commonly used when auditing accounts in the inventory and warehousing cycle.

Sample size in physical observation of inventory is:

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Overall audit plan and audit program

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit sampling

Audit of transaction cycles and financial statement balances II

Completing the audit

Audit reporting

Other auditing and assurance engagements

Filters

Exam 15: Audit of transaction cycles and financial statement balances I

When goods are received, adequate control requires examination for:

When a physical count of inventory is performed at an interim date, the auditor observes it at that time and tests the perpetuals for transactions:

A company failed to record an acquisition of merchandise and its attendant liability, but it was included in the physical count of ending inventory.The effect on the financial statements would be to:

Which document indicates the time an employee started and stopped working each day as well as the number of hours worked?

The primary concern in testing payroll-related liabilities is to make sure that:

Why does the auditor recount the client's inventory?

Which one of the following statements is NOT correct?

The audit procedure 'test clerical accuracy by footing the journals and tracing postings to general ledger and to accounts payable and inventory master files' is used to test the posting and summarisation objective for acquisitions.

What is the auditor's main concern when examining payroll transactions?

'Recorded payroll payments are for work actually performed by non-fictitious employees' is which transaction-related audit objective for payroll?

A formal review and reporting of obsolete, slow-moving, damaged, and overstated inventory items:

The auditor's transaction-related audit objective for acquisitions, to determine that recorded acquisitions are for goods and services received, relates to which accounting concept?

Which one of the following is NOT an element of the audit of the inventory and warehousing cycle?

A file recording payroll transactions for each employee and maintaining total wages paid for year to date is the:

Performing the physical count of inventory on a cycle basis throughout the year is acceptable for both perpetual and periodic inventory systems.

The file for recording each payroll transaction for each employee and maintaining total employee wages paid for the year to date is the:

When auditing the payroll and personnel cycle, tests of controls are rarely performed.

From an audit perspective, transactions are far more significant than related balance sheet accounts in the payroll and personnel cycle.

Identify three analytical procedures commonly used when auditing accounts in the inventory and warehousing cycle.

Sample size in physical observation of inventory is:

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Overall audit plan and audit program

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit sampling

Audit of transaction cycles and financial statement balances II

Completing the audit

Audit reporting

Other auditing and assurance engagements

Filters