Question 1

Which objective is not of vital importance when auditing the balance of the general cash account?

Accepted Answer

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

Question 2

Recording of an acquisition of a fixed asset at an improper amount affects the balance sheet until the company disposes of the asset, but the income statement is not affected.

Accepted Answer

A) True 
 B)False

Question 3

The test of details of balances procedure for PPE which requires 'examination of vendor's invoices and land titles and deeds' is done to satisfy which audit objective?

Accepted Answer

A)  accuracy 
B)  classification 
C)  existence 
D)  rights 
A)  accuracy 
B)  classification 
C)  existence 
D)  rights

Question 4

Cash account is primarily affected by which transactions in the acquisition and payment cycle?

Accepted Answer

A)  payment of dividends 
B)  issue of shares 
C)  both A and B 
D)  none of the above 
A)  payment of dividends 
B)  issue of shares 
C)  both A and B 
D)  none of the above

Question 5

The starting point for the verification of current year acquisitions of property, plant, and equipment is normally:

Accepted Answer

A)  a schedule obtained from the client of all acquisitions recorded in the general ledger during the year. 
B)  the acquisitions journal. 
C)  the purchase requisitions file. 
D)  the property, plant, and equipment account in the general ledger. 
A)  a schedule obtained from the client of all acquisitions recorded in the general ledger during the year. 
B)  the acquisitions journal. 
C)  the purchase requisitions file. 
D)  the property, plant, and equipment account in the general ledger.

Question 6

The procedure of comparing the total balance in loans payable, interest expense, and accrued interest with the prior year is to identify possible misstatements of interest expense, accrued interest, or loans payable.

Accepted Answer

A) True 
 B)False

Question 7

Usually dividends are audited:

Accepted Answer

A)  using variables sampling. 
B)  using block sampling. 
C)  using attributes sampling. 
D)  on a 100% basis. 
A)  using variables sampling. 
B)  using block sampling. 
C)  using attributes sampling. 
D)  on a 100% basis.

Question 8

Which of the following misstatements would result in the improper payment of cash or failure to receive cash not normally discovered as part of the audit of the bank reconciliation?

Accepted Answer

A)  payment to an employee for more hours than worked 
B)  payment of raw materials that were not received 
C)  duplicate payment of a vendor's invoice 
D)  all of the above 
A)  payment to an employee for more hours than worked 
B)  payment of raw materials that were not received 
C)  duplicate payment of a vendor's invoice 
D)  all of the above

Question 9

Cash account is primarily affected by which transactions in the acquisitions and payment cycle?

Accepted Answer

A)  expenses 
B)  accounts payable 
C)  both A and B 
D)  none of the above 
A)  expenses 
B)  accounts payable 
C)  both A and B 
D)  none of the above

Question 10

Which of the following procedures can test the audit objective of determining that cash in bank, as stated on the reconciliation, foots correctly and agrees with the general ledger?

Accepted Answer

A)  adding the unpresented cheques list and the list of deposits in transit 
B)  examining the minutes of the board of directors for restrictions on the use of cash 
C)  performing tests for kiting 
D)  receiving and testing a cutoff bank statement 
A)  adding the unpresented cheques list and the list of deposits in transit 
B)  examining the minutes of the board of directors for restrictions on the use of cash 
C)  performing tests for kiting 
D)  receiving and testing a cutoff bank statement

Question 11

Cash account is primarily affected by which transactions in the payroll and personnel cycle?

Accepted Answer

A)  sales 
B)  collections 
C)  both A and B 
D)  none of the above 
A)  sales 
B)  collections 
C)  both A and B 
D)  none of the above

Question 12

A major consideration in the audit of the general cash balance is the possibility of fraud.The auditor must extend his or her procedures in the audit of year-end cash to determine the possibility of a material fraud when there are:

Accepted Answer

A)  large cash receipts and disbursements during the year. 
B)  no imprest accounts used for payroll. 
C)  inadequate internal controls. 
D)  large cash balances at the end of the year. 
A)  large cash receipts and disbursements during the year. 
B)  no imprest accounts used for payroll. 
C)  inadequate internal controls. 
D)  large cash balances at the end of the year.

Question 13

If internal controls over cash-related transactions are operating effectively, control risk is increased.

Accepted Answer

A) True 
 B)False

Question 14

Cash balance is important in the audit because of:

Accepted Answer

A)  the potential for fraud. 
B)  the potential for error. 
C)  both A and B 
D)  none of the above 
A)  the potential for fraud. 
B)  the potential for error. 
C)  both A and B 
D)  none of the above

Question 15

Depreciation expense is normally verified using tests of controls and substantive tests of transactions.

Accepted Answer

A) True 
 B)False

Question 16

The emphasis in the audit of dividends is on the transactions rather than the ending balance.

Accepted Answer

A) True 
 B)False

Question 17

The term 'property, plant, and equipment' normally includes land, buildings, and equipment, but does not include furniture or motor vehicles.

Accepted Answer

A) True 
 B)False

Question 18

The starting point for the verification of the balance in the general bank account is to obtain:

Accepted Answer

A)  a bank reconciliation from the client. 
B)  a cutoff bank statement directly from the bank. 
C)  the client's cash account from the general ledger. 
D)  the client's June bank statement and reconcile it. 
A)  a bank reconciliation from the client. 
B)  a cutoff bank statement directly from the bank. 
C)  the client's cash account from the general ledger. 
D)  the client's June bank statement and reconcile it.

Question 19

The general cash account is considered significant in almost all audits:

Accepted Answer

A)  where the ending balance is material. 
B)  even when the ending balance is immaterial. 
C)  where either the beginning or ending balance is material. 
D)  except those of not-for-profit organisations. 
A)  where the ending balance is material. 
B)  even when the ending balance is immaterial. 
C)  where either the beginning or ending balance is material. 
D)  except those of not-for-profit organisations.

Question 20

Discuss the internal controls related to loan liabilities that are of concern to the auditor.

Accepted Answer

There are four important controls over i

Which objective is not of vital importance when auditing the balance of the general cash account?

Recording of an acquisition of a fixed asset at an improper amount affects the balance sheet until the company disposes of the asset, but the income statement is not affected.

The test of details of balances procedure for PPE which requires 'examination of vendor's invoices and land titles and deeds' is done to satisfy which audit objective?

Cash account is primarily affected by which transactions in the acquisition and payment cycle?

The starting point for the verification of current year acquisitions of property, plant, and equipment is normally:

The procedure of comparing the total balance in loans payable, interest expense, and accrued interest with the prior year is to identify possible misstatements of interest expense, accrued interest, or loans payable.

Usually dividends are audited:

Which of the following misstatements would result in the improper payment of cash or failure to receive cash not normally discovered as part of the audit of the bank reconciliation?

Cash account is primarily affected by which transactions in the acquisitions and payment cycle?

Which of the following procedures can test the audit objective of determining that cash in bank, as stated on the reconciliation, foots correctly and agrees with the general ledger?

Cash account is primarily affected by which transactions in the payroll and personnel cycle?

A major consideration in the audit of the general cash balance is the possibility of fraud.The auditor must extend his or her procedures in the audit of year-end cash to determine the possibility of a material fraud when there are:

If internal controls over cash-related transactions are operating effectively, control risk is increased.

Cash balance is important in the audit because of:

Depreciation expense is normally verified using tests of controls and substantive tests of transactions.

The emphasis in the audit of dividends is on the transactions rather than the ending balance.

The term 'property, plant, and equipment' normally includes land, buildings, and equipment, but does not include furniture or motor vehicles.

The starting point for the verification of the balance in the general bank account is to obtain:

The general cash account is considered significant in almost all audits:

Discuss the internal controls related to loan liabilities that are of concern to the auditor.

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 I

Completing the audit

Audit reporting

Other auditing and assurance engagements

Filters

Exam 16: Audit of transaction cycles and financial statement balances II

Which objective is not of vital importance when auditing the balance of the general cash account?

Recording of an acquisition of a fixed asset at an improper amount affects the balance sheet until the company disposes of the asset, but the income statement is not affected.

The test of details of balances procedure for PPE which requires 'examination of vendor's invoices and land titles and deeds' is done to satisfy which audit objective?

Cash account is primarily affected by which transactions in the acquisition and payment cycle?

The starting point for the verification of current year acquisitions of property, plant, and equipment is normally:

The procedure of comparing the total balance in loans payable, interest expense, and accrued interest with the prior year is to identify possible misstatements of interest expense, accrued interest, or loans payable.

Usually dividends are audited:

Which of the following misstatements would result in the improper payment of cash or failure to receive cash not normally discovered as part of the audit of the bank reconciliation?

Cash account is primarily affected by which transactions in the acquisitions and payment cycle?

Which of the following procedures can test the audit objective of determining that cash in bank, as stated on the reconciliation, foots correctly and agrees with the general ledger?

Cash account is primarily affected by which transactions in the payroll and personnel cycle?

A major consideration in the audit of the general cash balance is the possibility of fraud.The auditor must extend his or her procedures in the audit of year-end cash to determine the possibility of a material fraud when there are:

If internal controls over cash-related transactions are operating effectively, control risk is increased.

Cash balance is important in the audit because of:

Depreciation expense is normally verified using tests of controls and substantive tests of transactions.

The emphasis in the audit of dividends is on the transactions rather than the ending balance.

The term 'property, plant, and equipment' normally includes land, buildings, and equipment, but does not include furniture or motor vehicles.

The starting point for the verification of the balance in the general bank account is to obtain:

The general cash account is considered significant in almost all audits:

Discuss the internal controls related to loan liabilities that are of concern to the auditor.

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 I

Completing the audit

Audit reporting

Other auditing and assurance engagements

Filters