Question 1

Which of the following accounts is not affected by cash disbursement transactions?

Accepted Answer

A)  Cash. 
B)  Accounts payable. 
C)  Purchase discounts. 
D)  Purchase returns. 
A)  Cash. 
B)  Accounts payable. 
C)  Purchase discounts. 
D)  Purchase returns. D

Question 2

An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and the cash disbursements journal. The purpose of this substantive procedure most likely was to

Accepted Answer

A)  Identify unusually large purchases that should be investigated further. 
B)  Verify that cash disbursements were for goods actually received. 
C)  Determine that purchases were properly recorded. 
D)  Test whether payments were for goods actually ordered. 
A)  Identify unusually large purchases that should be investigated further. 
B)  Verify that cash disbursements were for goods actually received. 
C)  Determine that purchases were properly recorded. 
D)  Test whether payments were for goods actually ordered. C

Question 3

An examination of the balance in the accounts payable account is ordinarily not designed to

Accepted Answer

A)  Determine that the amounts represent obligations of the company. 
B)  Verify that accounts payable were properly authorized. 
C)  Ascertain the reasonableness of recorded liabilities. 
D)  Determine that all existing liabilities at the balance sheet date have been recorded. 
A)  Determine that the amounts represent obligations of the company. 
B)  Verify that accounts payable were properly authorized. 
C)  Ascertain the reasonableness of recorded liabilities. 
D)  Determine that all existing liabilities at the balance sheet date have been recorded. B

Question 4

The cutoff assertion for accounts payable includes

Accepted Answer

A)  Determining whether all accounts payable are recorded. 
B)  Determining whether all accounts payable actually are liabilities. 
C)  Determining whether all accounts payable are recorded in the proper period. 
D)  Determining whether all accounts payable are properly classified in the financial statements. 
A)  Determining whether all accounts payable are recorded. 
B)  Determining whether all accounts payable actually are liabilities. 
C)  Determining whether all accounts payable are recorded in the proper period. 
D)  Determining whether all accounts payable are properly classified in the financial statements.

Question 5

An entity erroneously recorded a large purchase twice. Which of the following internal controls would be most likely to detect this error in a timely and efficient manner?

Accepted Answer

A)  Footing the purchases journal. 
B)  Reconciling vendors' monthly statements with subsidiary payable ledger accounts. 
C)  Tracing totals from the purchases journal to the ledger accounts. 
D)  Sending written quarterly confirmations to all vendors. 
A)  Footing the purchases journal. 
B)  Reconciling vendors' monthly statements with subsidiary payable ledger accounts. 
C)  Tracing totals from the purchases journal to the ledger accounts. 
D)  Sending written quarterly confirmations to all vendors.

Question 6

An entity's internal control requires that for every check request 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 7

The mailing of disbursement checks and remittance advices should be controlled by the employee who

Accepted Answer

A)  Signed the checks last. 
B)  Approved the vouchers for payment. 
C)  Matched the receiving reports, purchase orders and vendors' invoices. 
D)  Verified the mathematical accuracy of the vouchers and remittance advices. 
A)  Signed the checks last. 
B)  Approved the vouchers for payment. 
C)  Matched the receiving reports, purchase orders and vendors' invoices. 
D)  Verified the mathematical accuracy of the vouchers and remittance advices.

Question 8

If payables turnover has increased significantly since the prior year, this is an indication that which of the following assertions for accounts payable might be violated?

Accepted Answer

A)  Existence or occurrence. 
B)  Completeness. 
C)  Rights and obligations. 
D)  Valuation and allocation. 
A)  Existence or occurrence. 
B)  Completeness. 
C)  Rights and obligations. 
D)  Valuation and allocation.

Question 9

Accounts payable confirmations are used to test

Accepted Answer

A)  Both the existence and completeness audit assertions. 
B)  Only the existence audit assertion. 
C)  Only the completeness audit assertion. 
D)  Either existence or completeness, depending upon the response rate. 
A)  Both the existence and completeness audit assertions. 
B)  Only the existence audit assertion. 
C)  Only the completeness audit assertion. 
D)  Either existence or completeness, depending upon the response rate.

Question 10

Which of the following procedures relating to the examination of accounts payable could the auditor delegate entirely to the entity's employees?

Accepted Answer

A)  Test footings in the accounts payable ledger. 
B)  Reconcile unpaid invoices to vendors' statements. 
C)  Prepare a schedule of accounts payable. 
D)  Mail confirmations for selected account balances. 
A)  Test footings in the accounts payable ledger. 
B)  Reconcile unpaid invoices to vendors' statements. 
C)  Prepare a schedule of accounts payable. 
D)  Mail confirmations for selected account balances.

Question 11

A receiving report is used to document the ordering of goods.

Accepted Answer

A) True 
 B)False

Question 12

For effective internal control, the accounts payable department should compare the information on each vendor's invoice with the

Accepted Answer

A)  Receiving report and the purchase order. 
B)  Receiving report and the voucher. 
C)  Vendor's packing slip and the purchase order. 
D)  Vendor's packing slip and the voucher. 
A)  Receiving report and the purchase order. 
B)  Receiving report and the voucher. 
C)  Vendor's packing slip and the purchase order. 
D)  Vendor's packing slip and the voucher.

Question 13

Identify whether the following tests are substantive analytical procedures, tests of details of transactions, or tests of details of account balances:
1) Test a sample of purchase requisitions for proper authorization.
2) Test transactions around year-end to determine if they are recorded in the proper period.
3) Review results of confirmation of selected accounts payable.
4) Compare payables turnover to previous years' data.
5) Obtain selected vendors' statements and reconcile to vendor accounts.
6) Compare purchase returns and allowances as a percentage of revenue or cost of sales to industry data.

Accepted Answer

1) Tests of details of transactions.
2)

Question 14

Match the test of controls described below to the appropriate assertion it is used to test.

Accepted Answer

The answer of Match the test of controls described below...

Question 15

With respect to a small company's system of purchasing supplies, an auditor's primary concern should be to obtain satisfaction that supplies ordered and paid for have been

Accepted Answer

A)  Requested and approved by authorized individuals who have no incompatible duties. 
B)  Received, counted, and checked to quantities and amounts on purchase orders and invoices. 
C)  Properly recorded as assets and systematically amortized over the estimated useful life of the supplies. 
D)  Used in the course of business and solely for business purposes during the year under audit. 
A)  Requested and approved by authorized individuals who have no incompatible duties. 
B)  Received, counted, and checked to quantities and amounts on purchase orders and invoices. 
C)  Properly recorded as assets and systematically amortized over the estimated useful life of the supplies. 
D)  Used in the course of business and solely for business purposes during the year under audit.

Question 16

Substantive procedures to examine the completeness assertion for accounts payable include

Accepted Answer

A)  Selecting a sample of vouchers and agreeing them to authorized purchase orders. 
B)  Selecting a sample of vouchers and tracing them to the purchases journal. 
C)  Comparing dates on vouchers to dates in the purchases journal. 
D)  Recomputing the mathematical accuracy of a sample of vendor invoices. 
A)  Selecting a sample of vouchers and agreeing them to authorized purchase orders. 
B)  Selecting a sample of vouchers and tracing them to the purchases journal. 
C)  Comparing dates on vouchers to dates in the purchases journal. 
D)  Recomputing the mathematical accuracy of a sample of vendor invoices.

Question 17

Which of the following is a substantive procedure that an auditor most likely would perform to verify the existence of recorded accounts payable?

Accepted Answer

A)  Investigating the open purchase order file to ascertain that prenumbered purchase orders are used and accounted for. 
B)  Receiving the entity's mail, unopened, for a reasonable period of time after the year-end to search for unrecorded vendor's invoices. 
C)  Vouching selected entries in the accounts payable subsidiary ledger to purchase orders and receiving reports. 
D)  Confirming accounts payable balances with known suppliers who have zero balances. 
A)  Investigating the open purchase order file to ascertain that prenumbered purchase orders are used and accounted for. 
B)  Receiving the entity's mail, unopened, for a reasonable period of time after the year-end to search for unrecorded vendor's invoices. 
C)  Vouching selected entries in the accounts payable subsidiary ledger to purchase orders and receiving reports. 
D)  Confirming accounts payable balances with known suppliers who have zero balances.

Question 18

To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population of documents for this test consists of all

Accepted Answer

A)  Payment vouchers. 
B)  Receiving reports. 
C)  Purchase requisitions. 
D)  Vendors' invoices. 
A)  Payment vouchers. 
B)  Receiving reports. 
C)  Purchase requisitions. 
D)  Vendors' invoices.

Question 19

The principal business objectives of the purchasing process are acquiring goods and services and paying for those goods and services.

Accepted Answer

A) True 
 B)False

Question 20

An auditor compares information on canceled checks with information contained in the cash disbursements journal. The objective of this test is to determine that

Accepted Answer

A)  Recorded cash disbursement transactions are properly authorized. 
B)  Proper cash purchase discounts have been recorded. 
C)  Cash disbursements are for goods and services actually received. 
D)  No discrepancies exist between the data on the checks and the data in the journal. 
A)  Recorded cash disbursement transactions are properly authorized. 
B)  Proper cash purchase discounts have been recorded. 
C)  Cash disbursements are for goods and services actually received. 
D)  No discrepancies exist between the data on the checks and the data in the journal.

Which of the following accounts is not affected by cash disbursement transactions?

An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and the cash disbursements journal. The purpose of this substantive procedure most likely was to

An examination of the balance in the accounts payable account is ordinarily not designed to

The cutoff assertion for accounts payable includes

An entity erroneously recorded a large purchase twice. Which of the following internal controls would be most likely to detect this error in a timely and efficient manner?

The mailing of disbursement checks and remittance advices should be controlled by the employee who

If payables turnover has increased significantly since the prior year, this is an indication that which of the following assertions for accounts payable might be violated?

Accounts payable confirmations are used to test

Which of the following procedures relating to the examination of accounts payable could the auditor delegate entirely to the entity's employees?

A receiving report is used to document the ordering of goods.

For effective internal control, the accounts payable department should compare the information on each vendor's invoice with the

Match the test of controls described below to the appropriate assertion it is used to test.

With respect to a small company's system of purchasing supplies, an auditor's primary concern should be to obtain satisfaction that supplies ordered and paid for have been

Substantive procedures to examine the completeness assertion for accounts payable include

Which of the following is a substantive procedure that an auditor most likely would perform to verify the existence of recorded accounts payable?

To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population of documents for this test consists of all

The principal business objectives of the purchasing process are acquiring goods and services and paying for those goods and services.

An auditor compares information on canceled checks with information contained in the cash disbursements journal. The objective of this test is to determine that

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Human Resource Management Process

Auditing the Inventory Management Process

Auditing the Financing Investing Process: Prepaid Expenses Intangible Assets and Property Plant and Equipment

Auditing the Financing Investing Process: Long-Term Liabilities Stockholders Equity and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct, Independence, and Quality Control

Legal Liability

Assurance, Attestation, and Internal Auditing Services

Filters

Exam 11: Auditing the Purchasing Process

Which of the following accounts is not affected by cash disbursement transactions?

An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and the cash disbursements journal. The purpose of this substantive procedure most likely was to

An examination of the balance in the accounts payable account is ordinarily not designed to

The cutoff assertion for accounts payable includes

An entity erroneously recorded a large purchase twice. Which of the following internal controls would be most likely to detect this error in a timely and efficient manner?

The mailing of disbursement checks and remittance advices should be controlled by the employee who

If payables turnover has increased significantly since the prior year, this is an indication that which of the following assertions for accounts payable might be violated?

Accounts payable confirmations are used to test

Which of the following procedures relating to the examination of accounts payable could the auditor delegate entirely to the entity's employees?

A receiving report is used to document the ordering of goods.

For effective internal control, the accounts payable department should compare the information on each vendor's invoice with the

Match the test of controls described below to the appropriate assertion it is used to test.

With respect to a small company's system of purchasing supplies, an auditor's primary concern should be to obtain satisfaction that supplies ordered and paid for have been

Substantive procedures to examine the completeness assertion for accounts payable include

Which of the following is a substantive procedure that an auditor most likely would perform to verify the existence of recorded accounts payable?

To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population of documents for this test consists of all

The principal business objectives of the purchasing process are acquiring goods and services and paying for those goods and services.

An auditor compares information on canceled checks with information contained in the cash disbursements journal. The objective of this test is to determine that

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Human Resource Management Process

Auditing the Inventory Management Process

Auditing the Financing Investing Process: Prepaid Expenses Intangible Assets and Property Plant and Equipment

Auditing the Financing Investing Process: Long-Term Liabilities Stockholders Equity and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct, Independence, and Quality Control

Legal Liability

Assurance, Attestation, and Internal Auditing Services

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