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

Controls which provide a means of ensuring that the physical counts are properly summarised, priced at the same amount as the unit records, correctly extended and totalled, and included in the general ledger at the proper amount are known as:

Which one of the following would NOT be a test used when auditing accrued sales commissions?

Commission expense is calculated as a percentage of sales and compared with previous years.

State five specific balance-related audit objectives for physical inventory observation, and, for each objective, describe one common test of details of balances related to that objective.

The total of the individual employee earnings in the payroll master file equals the total:

The audit procedure 'observe whether inventory movement takes place during the inventory count' provides assurance mainly for the completeness objective for physical inventory observation.

When the client's perpetual inventory master files are inadequate, the auditor will probably choose to test the physical inventory prior to the balance sheet date.

Which analytical procedure would be most helpful in alerting the auditor to the possibility of obsolete inventory? Compare

Which document indicates a reduction in the amount owed to a vendor because of returned goods?

The test of transactions, which requires 'compare paid cheques with the related acquisitions journal and cash payments journal', satisfies which transaction-related audit objective for cash payments?

Which one of the following internal accounting control procedures is effective in preventing duplicate payment of vendors' invoices?

When labour is a significant part of inventory, verifying the proper accounting of these costs should be tested in the:

When the client's physical inventory takes place before the last day of the year, it is still necessary to perform an accounts payable cutoff at the time of the physical count.In addition, the auditor must verify whether all acquisitions taking place between the physical count and the end of the year were added to:

The auditor should be satisfied that acquisitions of raw materials are correctly stated at the completion of the:

From which one of the following evidence-gathering audit procedures would an auditor obtain most assurance concerning the existence of inventories?

From an audit point of view, which one of the following would NOT be an important internal control in the personnel cycle?

Perpetual inventory master files maintained by persons who do not have custody of or access to assets are a useful cost accounting control, because:

A purchase order is often used to indicate authorisation of the acquisition.

What is the most important factor related to the observation of inventory?

Which items should auditors select when testing inventory for pricing?