Question 1

The review phase of the transaction flow in the acquisition and expenditure cycle does not include

Accepted Answer

A)  Interviews. 
B)  Observations. 
C)  Collecting sample documents. 
D)  Substantive procedures. 
A)  Interviews. 
B)  Observations. 
C)  Collecting sample documents. 
D)  Substantive procedures. D

Question 2

The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the

Accepted Answer

A)  Human resources function from the controllership function. 
B)  Administrative controls from the internal accounting controls. 
C)  Authorization of transactions from the custody of related assets. 
D)  Operational responsibility from the record keeping responsibility. 
A)  Human resources function from the controllership function. 
B)  Administrative controls from the internal accounting controls. 
C)  Authorization of transactions from the custody of related assets. 
D)  Operational responsibility from the record keeping responsibility. C

Question 3

Auditors can compare the ________________________________ file to the _________________________________ to determine whether the company has material unrecorded liabilities on the financial statement date.

Accepted Answer

unmatched receiving reports; payables listing

Question 4

Auditors ordinarily ascertain whether payroll checks are properly endorsed during the audit of

Accepted Answer

A)  Clock cards. 
B)  The voucher system. 
C)  Cash in bank. 
D)  Accrued payroll. 
A)  Clock cards. 
B)  The voucher system. 
C)  Cash in bank. 
D)  Accrued payroll.

Question 5

Checks are signed by the accounts payable department after assembling the invoice,purchase order,and receiving report.

Accepted Answer

A) True 
 B)False

Question 6

Explain why auditors must put more emphasis on the completeness and obligation assertion when auditing payables and contrast this with the audit of asset accounts.

Accepted Answer

The emphasis on completeness is rightly

Question 7

The test of controls for payroll includes the following audit procedures.Next to each of the procedures,indicate the related management assertion about transactions.

Accepted Answer

1.classification; 2.occurrence

Question 8

A large retail enterprise has established a policy that requires the paymaster to deliver all unclaimed payroll checks to the internal audit department at the end of each payroll distribution day.This policy was most likely adopted to

Accepted Answer

A)  Ensure that employees who were absent on a payroll distribution day are not paid for that day. 
B)  Prevent the paymaster from cashing checks that are unclaimed for several weeks. 
C)  Prevent a bona fide employee's check from being claimed by another employee. 
D)  Detect any fictitious employee who may have been placed on the payroll. 
A)  Ensure that employees who were absent on a payroll distribution day are not paid for that day. 
B)  Prevent the paymaster from cashing checks that are unclaimed for several weeks. 
C)  Prevent a bona fide employee's check from being claimed by another employee. 
D)  Detect any fictitious employee who may have been placed on the payroll.

Question 9

Which of the following would detect the understatement of a purchase discount?

Accepted Answer

A)  Verify the arithmetic accuracy of the purchases journal. 
B)  Compare purchase disbursement records and checks with invoice terms. 
C)  Compare approved purchase orders to receiving reports. 
D)  Verify the receipt of items ordered and invoiced. 
A)  Verify the arithmetic accuracy of the purchases journal. 
B)  Compare purchase disbursement records and checks with invoice terms. 
C)  Compare approved purchase orders to receiving reports. 
D)  Verify the receipt of items ordered and invoiced.

Question 10

Which of the following accounts would most likely be audited in connection with a related balance sheet account?

Accepted Answer

A)  Property Tax Expense. 
B)  Payroll Expense. 
C)  Research and Development. 
D)  Legal Expense. 
A)  Property Tax Expense. 
B)  Payroll Expense. 
C)  Research and Development. 
D)  Legal Expense.

Question 11

A list of all purchases might exist only in a ____________________________________ file rather than a _____________________________________.

Accepted Answer

computer t

Question 12

A voucher package is used to

Accepted Answer

A)  Document receipt of inventory. 
B)  Document completion of services. 
C)  Document a purchase contract. 
D)  Provide a source document for recording the purchase of a good or service. 
A)  Document receipt of inventory. 
B)  Document completion of services. 
C)  Document a purchase contract. 
D)  Provide a source document for recording the purchase of a good or service.

Question 13

The _____________________________________ inspects the goods received for _____________________________ and _____________________________ and then puts them in the hands of other responsible persons.

Accepted Answer

receiving

Question 14

An auditor vouched data for a sample of employees in a payroll register to approved clock card data to provide assurance that

Accepted Answer

A)  Payments to employees are computed at authorized rates. 
B)  Employees work the number of hours for which they are paid. 
C)  Separation of duties exists between the preparation and distribution of the payroll. 
D)  Internal controls relating to unclaimed payroll checks are operating effectively. 
A)  Payments to employees are computed at authorized rates. 
B)  Employees work the number of hours for which they are paid. 
C)  Separation of duties exists between the preparation and distribution of the payroll. 
D)  Internal controls relating to unclaimed payroll checks are operating effectively.

Question 15

When auditing merchandise inventory at year-end,the auditor performs a purchase cutoff test to obtain evidence that

Accepted Answer

A)  All goods purchased before year-end are received before the physical inventory count. 
B)  No goods held on consignment for customers are included in the inventory balance. 
C)  No goods observed during the physical count are pledged or sold. 
D)  All goods owned at year-end are included in the inventory balance. 
A)  All goods purchased before year-end are received before the physical inventory count. 
B)  No goods held on consignment for customers are included in the inventory balance. 
C)  No goods observed during the physical count are pledged or sold. 
D)  All goods owned at year-end are included in the inventory balance.

Question 16

An entity's internal control structure requires for every check request that there be an approved voucher,supported by a prenumbered purchase order and a prenumbered receiving report.To determine whether checks are being issued for unauthorized expenditures,an auditor most likely would select items for testing from the population of all

Accepted Answer

A)  Purchase orders. 
B)  Canceled checks. 
C)  Receiving reports. 
D)  Approved vouchers. 
A)  Purchase orders. 
B)  Canceled checks. 
C)  Receiving reports. 
D)  Approved vouchers.

Question 17

For which of the following accounts would the matching concept be the most appropriate?

Accepted Answer

A)  Cost of Goods Sold. 
B)  Research and Development. 
C)  Depreciation Expense. 
D)  Sales. 
A)  Cost of Goods Sold. 
B)  Research and Development. 
C)  Depreciation Expense. 
D)  Sales.

Question 18

Which of the following personnel department procedures reduces the risk of payroll fraud and represents an appropriate responsibility for the department?

Accepted Answer

A)  Distributing paychecks. 
B)  Authorizing overtime hours. 
C)  Authorizing the addition or deletion of employees from the payroll. 
D)  Collecting and retaining unclaimed paychecks. 
A)  Distributing paychecks. 
B)  Authorizing overtime hours. 
C)  Authorizing the addition or deletion of employees from the payroll. 
D)  Collecting and retaining unclaimed paychecks.

Question 19

A client's purchasing system ends with the recording of a liability and its eventual payment.Which of the following best describes auditors' primary concern with respect to liabilities resulting from the purchasing system?

Accepted Answer

A)  Accounts payable are not materially understated. 
B)  Authority to incur liabilities is restricted to one designated person. 
C)  Acquisition of materials is not made from one vendor or one group of vendors. 
D)  Commitments for all purchases are made only after established competitive bidding procedures are followed. 
A)  Accounts payable are not materially understated. 
B)  Authority to incur liabilities is restricted to one designated person. 
C)  Acquisition of materials is not made from one vendor or one group of vendors. 
D)  Commitments for all purchases are made only after established competitive bidding procedures are followed.

Question 20

All pay base data (hours,job number,absences,etc.)should be approved by an employee's immediate supervisor.

Accepted Answer

A) True 
 B)False

The review phase of the transaction flow in the acquisition and expenditure cycle does not include

The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the

Auditors can compare the file to the _ to determine whether the company has material unrecorded liabilities on the financial statement date.

Auditors ordinarily ascertain whether payroll checks are properly endorsed during the audit of

Checks are signed by the accounts payable department after assembling the invoice,purchase order,and receiving report.

Explain why auditors must put more emphasis on the completeness and obligation assertion when auditing payables and contrast this with the audit of asset accounts.

The test of controls for payroll includes the following audit procedures.Next to each of the procedures,indicate the related management assertion about transactions.

A large retail enterprise has established a policy that requires the paymaster to deliver all unclaimed payroll checks to the internal audit department at the end of each payroll distribution day.This policy was most likely adopted to

Which of the following would detect the understatement of a purchase discount?

Which of the following accounts would most likely be audited in connection with a related balance sheet account?

A list of all purchases might exist only in a file rather than a _.

A voucher package is used to

The _______________________ inspects the goods received for _ and _______________ and then puts them in the hands of other responsible persons.

An auditor vouched data for a sample of employees in a payroll register to approved clock card data to provide assurance that

When auditing merchandise inventory at year-end,the auditor performs a purchase cutoff test to obtain evidence that

For which of the following accounts would the matching concept be the most appropriate?

Which of the following personnel department procedures reduces the risk of payroll fraud and represents an appropriate responsibility for the department?

A client's purchasing system ends with the recording of a liability and its eventual payment.Which of the following best describes auditors' primary concern with respect to liabilities resulting from the purchasing system?

All pay base data (hours,job number,absences,etc.)should be approved by an employee's immediate supervisor.

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

Exam 8: Acquisition and Expenditure Cycle

The review phase of the transaction flow in the acquisition and expenditure cycle does not include

The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the

Auditors can compare the ________________________________ file to the _________________________________ to determine whether the company has material unrecorded liabilities on the financial statement date.

Auditors ordinarily ascertain whether payroll checks are properly endorsed during the audit of

Checks are signed by the accounts payable department after assembling the invoice,purchase order,and receiving report.

Explain why auditors must put more emphasis on the completeness and obligation assertion when auditing payables and contrast this with the audit of asset accounts.

The test of controls for payroll includes the following audit procedures.Next to each of the procedures,indicate the related management assertion about transactions.

A large retail enterprise has established a policy that requires the paymaster to deliver all unclaimed payroll checks to the internal audit department at the end of each payroll distribution day.This policy was most likely adopted to

Which of the following would detect the understatement of a purchase discount?

Which of the following accounts would most likely be audited in connection with a related balance sheet account?

A list of all purchases might exist only in a ____________________________________ file rather than a _____________________________________.

A voucher package is used to

The _____________________________________ inspects the goods received for _____________________________ and _____________________________ and then puts them in the hands of other responsible persons.

An auditor vouched data for a sample of employees in a payroll register to approved clock card data to provide assurance that

When auditing merchandise inventory at year-end,the auditor performs a purchase cutoff test to obtain evidence that

For which of the following accounts would the matching concept be the most appropriate?

Which of the following personnel department procedures reduces the risk of payroll fraud and represents an appropriate responsibility for the department?

A client's purchasing system ends with the recording of a liability and its eventual payment.Which of the following best describes auditors' primary concern with respect to liabilities resulting from the purchasing system?

All pay base data (hours,job number,absences,etc.)should be approved by an employee's immediate supervisor.

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

Auditors can compare the file to the _ to determine whether the company has material unrecorded liabilities on the financial statement date.

A list of all purchases might exist only in a file rather than a _.

The _______________________ inspects the goods received for _ and _______________ and then puts them in the hands of other responsible persons.