Question 1

Describe the methodology for designing tests of details of balances for accounts payable.

Accepted Answer

The methodology for designing tests of a

Question 2

List the four business functions in the acquisition and payment cycle.

Accepted Answer

1.processing purchase orders
2

Question 3

Auditors typically set performance materiality for accounts payable relatively low.

Accepted Answer

A) True 
 B)False

Question 4

The acquisition and payment cycle consists of one class of transactions.

Accepted Answer

A) True 
 B)False

Question 5

To test for overstatement cutoff amounts when auditing accounts payable,the auditor should trace receiving reports issued before year-end to related vendors' invoices to make sure they are not recorded as accounts payable.

Accepted Answer

A) True 
 B)False

Question 6

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 summarization objective for acquisitions.

Accepted Answer

A) True 
 B)False

Question 7

The overall objective in the audit of accounts payable is to determine whether accounts payable

Accepted Answer

A) are fairly stated and properly disclosed. 
B) are overstated. 
C) are understated. 
D) are accurately stated. 
A) are fairly stated and properly disclosed. 
B) are overstated. 
C) are understated. 
D) are accurately stated.

Question 8

Auditors examine supporting documentation for cash disbursements subsequent to the balance sheet date in order to determine whether the cash disbursement was for a current period liability.
Describe at least two audit procedures the auditor would perform to provide evidence that the cash disbursement was made for a current period liability.

Accepted Answer

1. Trace vendor invoice to accounts paya

Question 9

Auditors typically perform the acquisitions and cash disbursements tests at different times.

Accepted Answer

A) True 
 B)False

Question 10

How do auditors determine the extent of testing of internal controls in the acquisition and payment cycle?

Accepted Answer

When auditors intend to rely on controls

Question 11

Which of the following is not an accurate statement regarding the acquisition and payment cycle?

Accepted Answer

A) The personnel in the receiving department should be independent of the storeroom personnel. 
B) Goods received should be physically controlled from the time of their receipt until their use or disposal. 
C) Accounting records should transfer responsibility for the goods each time they are moved. 
D) The accounting department should be responsible for receiving goods and preparing the receiving report. 
A) The personnel in the receiving department should be independent of the storeroom personnel. 
B) Goods received should be physically controlled from the time of their receipt until their use or disposal. 
C) Accounting records should transfer responsibility for the goods each time they are moved. 
D) The accounting department should be responsible for receiving goods and preparing the receiving report.

Question 12

Which of the following is not a typical audit procedure performed as part of the out-of-period liability tests?

Accepted Answer

A) Examine underlying documentation for cash disbursements made during the last month of the year. 
B) Examine underlying documentation for bills not paid several weeks after the year-end. 
C) Trace receiving reports issued before year-end to related vendors' invoices. 
D) All of the above are correct. 
A) Examine underlying documentation for cash disbursements made during the last month of the year. 
B) Examine underlying documentation for bills not paid several weeks after the year-end. 
C) Trace receiving reports issued before year-end to related vendors' invoices. 
D) All of the above are correct.

Question 13

Which of the following should sign checks under conditions of effective internal control?

Accepted Answer

A) treasurer 
B) purchasing agent 
C) accounts payable clerk 
D) person preparing the checks 
A) treasurer 
B) purchasing agent 
C) accounts payable clerk 
D) person preparing the checks

Question 14

The auditor is performing tests of transactions for individual accounts payable transactions with vendors.Which document provides more reliable information about individual transactions with vendors?

Accepted Answer

A) receiving report 
B) vendors' invoices 
C) vendors' statements 
D) purchase orders 
A) receiving report 
B) vendors' invoices 
C) vendors' statements 
D) purchase orders

Question 15

Since there are a large number of accounts involved in the acquisition and payment cycle,there is the potential for classification misstatements,some of which are likely to affect income.

Accepted Answer

A) True 
 B)False

Question 16

Because of the importance of tests of controls and substantive tests of transactions for acquisitions and cash disbursements,it is common in this audit area to use

Accepted Answer

A) block sampling. 
B) variables sampling. 
C) attributes sampling. 
D) probability proportional to size sampling. 
A) block sampling. 
B) variables sampling. 
C) attributes sampling. 
D) probability proportional to size sampling.

Question 17

A document indicating a reduction in the amount owed to a vendor because of returned goods is

Accepted Answer

A) a debit memo. 
B) a credit memo. 
C) a receiving report. 
D) a contractual adjustment form. 
A) a debit memo. 
B) a credit memo. 
C) a receiving report. 
D) a contractual adjustment form.

Question 18

When reviewing the controls and procedures in the acquisition and payment cycle,

Accepted Answer

A) companies cannot record the liability for the acquisition until the invoice is received from the vendor. 
B) the purchasing department has the responsibility for verifying for appropriateness of the acquisition. 
C) personnel who record the acquisitions should not have access to cash or other assets. 
D) the accounts payable department should account for all receiving reports to assure that the occurrence objective is satisfied. 
A) companies cannot record the liability for the acquisition until the invoice is received from the vendor. 
B) the purchasing department has the responsibility for verifying for appropriateness of the acquisition. 
C) personnel who record the acquisitions should not have access to cash or other assets. 
D) the accounts payable department should account for all receiving reports to assure that the occurrence objective is satisfied.

Question 19

The accounts payable department usually has responsibility for approving acquisitions for payment by comparing the details on the

Accepted Answer

A) vendor's invoice and the receiving report. 
B) vendor's invoice and the purchase requisition. 
C) purchase order,receiving report,and vendor's invoice. 
D) purchase requisition,purchase order,and receiving report. 
A) vendor's invoice and the receiving report. 
B) vendor's invoice and the purchase requisition. 
C) purchase order,receiving report,and vendor's invoice. 
D) purchase requisition,purchase order,and receiving report.

Question 20

The test of transactions which requires one to "reconcile recorded cash disbursements with the cash disbursements on the bank statement" 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.

Exam 18: Audit of the Acquisition and Payment Cycle: Tests of Controls,

Describe the methodology for designing tests of details of balances for accounts payable.

List the four business functions in the acquisition and payment cycle.

Auditors typically set performance materiality for accounts payable relatively low.

The acquisition and payment cycle consists of one class of transactions.

To test for overstatement cutoff amounts when auditing accounts payable,the auditor should trace receiving reports issued before year-end to related vendors' invoices to make sure they are not recorded as accounts payable.

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 summarization objective for acquisitions.

The overall objective in the audit of accounts payable is to determine whether accounts payable

Auditors typically perform the acquisitions and cash disbursements tests at different times.

How do auditors determine the extent of testing of internal controls in the acquisition and payment cycle?

Which of the following is not an accurate statement regarding the acquisition and payment cycle?

Which of the following is not a typical audit procedure performed as part of the out-of-period liability tests?

Which of the following should sign checks under conditions of effective internal control?

The auditor is performing tests of transactions for individual accounts payable transactions with vendors.Which document provides more reliable information about individual transactions with vendors?

Since there are a large number of accounts involved in the acquisition and payment cycle,there is the potential for classification misstatements,some of which are likely to affect income.

Because of the importance of tests of controls and substantive tests of transactions for acquisitions and cash disbursements,it is common in this audit area to use

A document indicating a reduction in the amount owed to a vendor because of returned goods is

When reviewing the controls and procedures in the acquisition and payment cycle,

The accounts payable department usually has responsibility for approving acquisitions for payment by comparing the details on the

The test of transactions which requires one to "reconcile recorded cash disbursements with the cash disbursements on the bank statement" satisfies the objective of

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

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Completing the Audit

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