Question 1

When determining sample sizes for accounts payable tests,

Accepted Answer

A) sample sizes rarely vary from audit to audit. 
B) auditors must try to ensure that the population includes all potential payables. 
C) defining the population is a simple procedure. 
D) all of the above are correct. 
A) sample sizes rarely vary from audit to audit. 
B) auditors must try to ensure that the population includes all potential payables. 
C) defining the population is a simple procedure. 
D) all of the above are correct.

Question 2

You are performing the audit of Jenkins and Company.Your tests of controls and tests of transactions for accounts payable demonstrate that the controls are operating effectively.This would normally allow you to

Accepted Answer

A) eliminate the need for substantive testing of balances for accounts payable. 
B) reduce the need for substantive testing of balances for accounts payable. 
C) reduce control tests in other transactions cycles. 
D) increase the need for substantive testing of balances for accounts payable. 
A) eliminate the need for substantive testing of balances for accounts payable. 
B) reduce the need for substantive testing of balances for accounts payable. 
C) reduce control tests in other transactions cycles. 
D) increase the need for substantive testing of balances for accounts payable.

Question 3

The documents typically used to reconcile the balance on the accounts payable list with the confirmation or vendor's statements include all of the following except for

Accepted Answer

A) receiving reports. 
B) vendor's invoices. 
C) sales invoices. 
D) cancelled checks. 
A) receiving reports. 
B) vendor's invoices. 
C) sales invoices. 
D) cancelled checks.

Question 4

A written purchase order is a contractual document that is

Accepted Answer

A) an offer to buy goods or services. 
B) not enforceable if it is not in writing. 
C) prepared by the receiving department. 
D) an acceptance of a vendor's catalog offer to sell. 
A) an offer to buy goods or services. 
B) not enforceable if it is not in writing. 
C) prepared by the receiving department. 
D) an acceptance of a vendor's catalog offer to sell.

Question 5

A document generally received from the vendor which indicates a reduction in the amount owed due to the company granting an allowance is a

Accepted Answer

A) vendor invoice. 
B) debit memo. 
C) credit adjustment form. 
D) credit memo. 
A) vendor invoice. 
B) debit memo. 
C) credit adjustment form. 
D) credit memo.

Question 6

The audit procedure "Examine canceled check for authorized signature,proper endorsement,and cancellation by the bank" is used to test the occurrence objective for cash disbursements.

Accepted Answer

A) True 
 B)False

Question 7

Discuss each of the four business functions that comprise the acquisition and payment cycle.

Accepted Answer

The four business functions that compris

Question 8

Which one of the following duties should not be assigned the purchases department?

Accepted Answer

A) finding the lowest cost vendor 
B) reviewing vendors' catalog descriptions and prices for standardized items 
C) designing the purchase order form 
D) authorizing the acquisition of goods 
A) finding the lowest cost vendor 
B) reviewing vendors' catalog descriptions and prices for standardized items 
C) designing the purchase order form 
D) authorizing the acquisition of goods

Question 9

You have been assigned to the accounts payable transaction cycle as part of your auditing responsibilities.You have decided to vouch a sample of entries in the accounts payable master file to supporting documents.Which assertion is this test of controls most likely to support?

Accepted Answer

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

Question 10

Listed below are some management assertions made for the acquisition and payment cycle.For each one give an example of how the auditor by using the documents normally found in the process can apply an auditing procedure to test the assertion.
completeness
timing
accuracy

Accepted Answer

(may vary based on student response)
com

Question 11

________ is a balance-related audit objective that is not applicable to liabilities.

Accepted Answer

A) Existence 
B) Accuracy 
C) Detail tie-in 
D) Realizable value 
A) Existence 
B) Accuracy 
C) Detail tie-in 
D) Realizable value

Question 12

When auditors examine vendors' statements or receive confirmations,there must be a reconciliation of the statement or confirmation with the

Accepted Answer

A) accounts payable list. 
B) vendors' invoices. 
C) purchase orders. 
D) receiving reports. 
A) accounts payable list. 
B) vendors' invoices. 
C) purchase orders. 
D) receiving reports.

Question 13

What typically initiates the acquisitions and payment cycle?

Accepted Answer

A) issuance of a purchase requisition or request for purchase of goods or services 
B) issuance of payment to vendor 
C) approval of a new vendor 
D) purchase requisition 
A) issuance of a purchase requisition or request for purchase of goods or services 
B) issuance of payment to vendor 
C) approval of a new vendor 
D) purchase requisition

Question 14

Internal controls that are likely to prevent the client from including as a business expense those transactions that primarily benefit management or other employees rather that the entity being audited satisfy the control objective that

Accepted Answer

A) acquisitions are correctly valued. 
B) existing acquisitions are recorded. 
C) acquisitions are correctly classified. 
D) recorded acquisitions are for goods and services received. 
A) acquisitions are correctly valued. 
B) existing acquisitions are recorded. 
C) acquisitions are correctly classified. 
D) recorded acquisitions are for goods and services received.

Question 15

Which substantive analytical procedure would help determine if there are unrecorded or nonexistent accounts?

Accepted Answer

A) Review the list of accounts payable for unusual items. 
B) Compare acquisition-related expense account balances with prior years. 
C) Calculate ratios,such as accounts payable divided by current liabilities. 
D) Calculate ratios,such as sales divided by gross profit. 
A) Review the list of accounts payable for unusual items. 
B) Compare acquisition-related expense account balances with prior years. 
C) Calculate ratios,such as accounts payable divided by current liabilities. 
D) Calculate ratios,such as sales divided by gross profit.

Question 16

When a client uses perpetual inventory records,the tests of details of balances for inventory can be significantly reduced if the auditor believes the records are accurate.The controls over the acquisitions included in the records are normally tested as a part of the

Accepted Answer

A) tests of controls for acquisitions. 
B) tests of controls and substantive tests of transactions for acquisitions. 
C) tests of details of balances for acquisitions. 
D) analytical procedures and tests of controls for acquisitions. 
A) tests of controls for acquisitions. 
B) tests of controls and substantive tests of transactions for acquisitions. 
C) tests of details of balances for acquisitions. 
D) analytical procedures and tests of controls for acquisitions.

Question 17

The auditor's internal control objective to determine that "recorded acquisitions are for goods and services received" satisfies the audit objective of

Accepted Answer

A) accuracy. 
B) occurrence. 
C) authorization. 
D) completeness. 
A) accuracy. 
B) occurrence. 
C) authorization. 
D) completeness.

Question 18

Vendors' statements and vendors' invoices are both relatively reliable evidence because they

Accepted Answer

A) come directly to the auditor without being in client's possession. 
B) originate from a third party. 
C) validate the effectiveness of the control system. 
D) are compared to and reconciled with sales invoices. 
A) come directly to the auditor without being in client's possession. 
B) originate from a third party. 
C) validate the effectiveness of the control system. 
D) are compared to and reconciled with sales invoices.

Question 19

A substantive test of transactions commonly used to test the completeness objective for acquisitions is "Trace from a file of receiving reports to the acquisitions journal."

Accepted Answer

A) True 
 B)False

Question 20

An auditor performs a test to determine whether all merchandise for which the client was billed was received.The population for this test consists of all

Accepted Answer

A) merchandise received. 
B) vendors' invoices. 
C) canceled checks. 
D) receiving reports. 
A) merchandise received. 
B) vendors' invoices. 
C) canceled checks. 
D) receiving reports.

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

When determining sample sizes for accounts payable tests,

You are performing the audit of Jenkins and Company.Your tests of controls and tests of transactions for accounts payable demonstrate that the controls are operating effectively.This would normally allow you to

The documents typically used to reconcile the balance on the accounts payable list with the confirmation or vendor's statements include all of the following except for

A written purchase order is a contractual document that is

A document generally received from the vendor which indicates a reduction in the amount owed due to the company granting an allowance is a

The audit procedure "Examine canceled check for authorized signature,proper endorsement,and cancellation by the bank" is used to test the occurrence objective for cash disbursements.

Discuss each of the four business functions that comprise the acquisition and payment cycle.

Which one of the following duties should not be assigned the purchases department?

You have been assigned to the accounts payable transaction cycle as part of your auditing responsibilities.You have decided to vouch a sample of entries in the accounts payable master file to supporting documents.Which assertion is this test of controls most likely to support?

Listed below are some management assertions made for the acquisition and payment cycle.For each one give an example of how the auditor by using the documents normally found in the process can apply an auditing procedure to test the assertion. completeness timing accuracy

________ is a balance-related audit objective that is not applicable to liabilities.

When auditors examine vendors' statements or receive confirmations,there must be a reconciliation of the statement or confirmation with the

What typically initiates the acquisitions and payment cycle?

Internal controls that are likely to prevent the client from including as a business expense those transactions that primarily benefit management or other employees rather that the entity being audited satisfy the control objective that

Which substantive analytical procedure would help determine if there are unrecorded or nonexistent accounts?

When a client uses perpetual inventory records,the tests of details of balances for inventory can be significantly reduced if the auditor believes the records are accurate.The controls over the acquisitions included in the records are normally tested as a part of the

The auditor's internal control objective to determine that "recorded acquisitions are for goods and services received" satisfies the audit objective of

Vendors' statements and vendors' invoices are both relatively reliable evidence because they

A substantive test of transactions commonly used to test the completeness objective for acquisitions is "Trace from a file of receiving reports to the acquisitions journal."

An auditor performs a test to determine whether all merchandise for which the client was billed was received.The population for this test consists of all

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

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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