Question 1

The occurrence 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 2

An internal control questionnaire indicates that an approved receiving report is required to accompany every check request for payment of merchandise.Which of the following procedures provides the greatest assurance that this control is operating effectively?

Accepted Answer

A)  Select and examine receiving reports and ascertain that the related canceled checks are dated no earlier than the receiving reports. 
B)  Select and examine receiving reports and ascertain that the related canceled checks are dated no later than the receiving reports. 
C)  Select and examine canceled checks and ascertain that the related receiving reports are dated no earlier than the checks. 
D)  Select and examine canceled checks and ascertain that the related receiving reports are dated no later than the checks. 
A)  Select and examine receiving reports and ascertain that the related canceled checks are dated no earlier than the receiving reports. 
B)  Select and examine receiving reports and ascertain that the related canceled checks are dated no later than the receiving reports. 
C)  Select and examine canceled checks and ascertain that the related receiving reports are dated no earlier than the checks. 
D)  Select and examine canceled checks and ascertain that the related receiving reports are dated no later than the checks.

Question 3

Identify the types of substantive procedures used by the auditor to test accounts payable and accrued expenses.Provide an example of how the auditor may use each substantive procedure.Identify if any of the substantive procedures can be used as a test of controls or a dual-purpose test.

Accepted Answer

The auditor uses substantive procedures

Question 4

In auditing accounts payable,an auditor's procedures most likely would focus primarily on management's assertion of

Accepted Answer

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

Question 5

The auditor can often obtain sufficient appropriate evidence in the audit of a tax provision without the use of a specialist.However,several situations may indicate a need for the auditor to involve a tax specialist.Identify three of these situations.

Accepted Answer

Answers should include three of the foll

Question 6

Which of the following is the most effective control activity to detect vouchers prepared for the payment of goods that were not received?

Accepted Answer

A)  Counting of goods upon receipt in the storeroom. 
B)  Matching of purchase order, receiving report, and vendor invoice for each voucher in the accounts payable department. 
C)  Comparison of goods received with goods requisitioned in the receiving department. 
D)  Verification of vouchers for accuracy and approval in the internal audit department. 
A)  Counting of goods upon receipt in the storeroom. 
B)  Matching of purchase order, receiving report, and vendor invoice for each voucher in the accounts payable department. 
C)  Comparison of goods received with goods requisitioned in the receiving department. 
D)  Verification of vouchers for accuracy and approval in the internal audit department.

Question 7

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 8

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)Te

Question 9

A debit memo

Accepted Answer

A)  Reduces the amount of accounts payable to a vendor. 
B)  Reduces accounts payable when payment is made. 
C)  Is used by vendors to record cash payments received. 
D)  Authorizes a debit to purchases when goods are received. 
A)  Reduces the amount of accounts payable to a vendor. 
B)  Reduces accounts payable when payment is made. 
C)  Is used by vendors to record cash payments received. 
D)  Authorizes a debit to purchases when goods are received.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Match between columns
                        Premises:  Cutoff
 Accuracy
 Authorization
 Occurrence
 Classification
 Completeness

Accepted Answer

The Answer of Compare the dates on the receiving reports is...

Question 12

Tests designed to detect purchases made before the end of the year that have been recorded in the subsequent year most likely would provide assurance about management's assertion of

Accepted Answer

A)  Accuracy. 
B)  Occurrence. 
C)  Cutoff. 
D)  Classification. 
A)  Accuracy. 
B)  Occurrence. 
C)  Cutoff. 
D)  Classification.

Question 13

The audit procedures used to verify accrued liabilities differ from those employed for the verification of accounts payable because

Accepted Answer

A)  Accrued liabilities usually pertain to services of a continuing nature, while accounts payable are the result of completed transactions. 
B)  Accrued liability balances are less material than accounts payable balances. 
C)  Evidence supporting accrued liabilities is nonexistent, while evidence supporting accounts payable is readily available. 
D)  Accrued liabilities at year-end will become accounts payable during the following year. 
A)  Accrued liabilities usually pertain to services of a continuing nature, while accounts payable are the result of completed transactions. 
B)  Accrued liability balances are less material than accounts payable balances. 
C)  Evidence supporting accrued liabilities is nonexistent, while evidence supporting accounts payable is readily available. 
D)  Accrued liabilities at year-end will become accounts payable during the following year.

Question 14

Which of the following describes a temporary difference?

Accepted Answer

A)  A difference that will be corrected in an amended tax return. 
B)  A difference arising from an uncertain tax position. 
C)  A fundamental difference in what constitutes revenue or expense for GAAP and tax purposes. 
D)  A timing difference between the recognition of revenue or expense under GAAP and tax purposes. 
A)  A difference that will be corrected in an amended tax return. 
B)  A difference arising from an uncertain tax position. 
C)  A fundamental difference in what constitutes revenue or expense for GAAP and tax purposes. 
D)  A timing difference between the recognition of revenue or expense under GAAP and tax purposes.

Question 15

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 16

Accounts payable confirmations are used less frequently by auditors than accounts receivable confirmations.

Accepted Answer

A) True 
 B)False

Question 17

The key inherent risk factors an auditor must consider when auditing the purchasing process are industry factors.Which two are most important and why?

Accepted Answer

The adequacy of the supply of raw materi

Question 18

The auditor is most likely to verify accrued commissions payable in conjunction with the

Accepted Answer

A)  Sales cutoff review. 
B)  Verification of employees. 
C)  Review of post balance sheet date disbursements. 
D)  Examination of trade accounts payable. 
A)  Sales cutoff review. 
B)  Verification of employees. 
C)  Review of post balance sheet date disbursements. 
D)  Examination of trade accounts payable.

Question 19

The purchase journal is referred to as a check register.

Accepted Answer

A) True 
 B)False

Question 20

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.

The occurrence assertion for accounts payable includes

An internal control questionnaire indicates that an approved receiving report is required to accompany every check request for payment of merchandise.Which of the following procedures provides the greatest assurance that this control is operating effectively?

Identify the types of substantive procedures used by the auditor to test accounts payable and accrued expenses.Provide an example of how the auditor may use each substantive procedure.Identify if any of the substantive procedures can be used as a test of controls or a dual-purpose test.

In auditing accounts payable,an auditor's procedures most likely would focus primarily on management's assertion of

The auditor can often obtain sufficient appropriate evidence in the audit of a tax provision without the use of a specialist.However,several situations may indicate a need for the auditor to involve a tax specialist.Identify three of these situations.

Which of the following is the most effective control activity to detect vouchers prepared for the payment of goods that were not received?

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

A debit memo

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

Tests designed to detect purchases made before the end of the year that have been recorded in the subsequent year most likely would provide assurance about management's assertion of

The audit procedures used to verify accrued liabilities differ from those employed for the verification of accounts payable because

Which of the following describes a temporary difference?

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

Accounts payable confirmations are used less frequently by auditors than accounts receivable confirmations.

The key inherent risk factors an auditor must consider when auditing the purchasing process are industry factors.Which two are most important and why?

The auditor is most likely to verify accrued commissions payable in conjunction with the

The purchase journal is referred to as a check register.

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?

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

Assurance,Attestation,and Internal Auditing Services

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting 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

The occurrence assertion for accounts payable includes

An internal control questionnaire indicates that an approved receiving report is required to accompany every check request for payment of merchandise.Which of the following procedures provides the greatest assurance that this control is operating effectively?

Identify the types of substantive procedures used by the auditor to test accounts payable and accrued expenses.Provide an example of how the auditor may use each substantive procedure.Identify if any of the substantive procedures can be used as a test of controls or a dual-purpose test.

In auditing accounts payable,an auditor's procedures most likely would focus primarily on management's assertion of

The auditor can often obtain sufficient appropriate evidence in the audit of a tax provision without the use of a specialist.However,several situations may indicate a need for the auditor to involve a tax specialist.Identify three of these situations.

Which of the following is the most effective control activity to detect vouchers prepared for the payment of goods that were not received?

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

A debit memo

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

Tests designed to detect purchases made before the end of the year that have been recorded in the subsequent year most likely would provide assurance about management's assertion of

The audit procedures used to verify accrued liabilities differ from those employed for the verification of accounts payable because

Which of the following describes a temporary difference?

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

Accounts payable confirmations are used less frequently by auditors than accounts receivable confirmations.

The key inherent risk factors an auditor must consider when auditing the purchasing process are industry factors.Which two are most important and why?

The auditor is most likely to verify accrued commissions payable in conjunction with the

The purchase journal is referred to as a check register.

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?

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

Assurance,Attestation,and Internal Auditing Services

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting 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