Question 1

Substantive procedures to examine the occurrence 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. A

Question 2

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  True

Question 3

The accounts payable department receives the purchase order form to accomplish all of the following except to:

Accepted Answer

A)  compare invoice price to purchase order price. 
B)  ensure that the purchase had been properly authorized. 
C)  ensure that the goods had been received by the party requesting the goods. 
D)  compare quantity ordered to quantity purchased. 
A)  compare invoice price to purchase order price. 
B)  ensure that the purchase had been properly authorized. 
C)  ensure that the goods had been received by the party requesting the goods. 
D)  compare quantity ordered to quantity purchased. C

Question 4

Listed below are six assertions regarding the financial presentations made in the purchasing process.For each,give an example of how an auditor could use one of the typical documents in the purchasing process to test the assertion.
Occurrence
Completeness
Authorization
Accuracy
Cutoff
Classification

Accepted Answer

Occurrence - The receiving report provid

Question 5

When searching for unrecorded liabilities at year-end,the population identified for sampling would be

Accepted Answer

A)  cash receipts from related parties recorded before year-end. 
B)  creditors whose accounts appear on a subsidiary trial balance of accounts payable. 
C)  cash disbursements recorded in the period subsequent to year-end. 
D)  invoices dated a few days before and after year-end. 
A)  cash receipts from related parties recorded before year-end. 
B)  creditors whose accounts appear on a subsidiary trial balance of accounts payable. 
C)  cash disbursements recorded in the period subsequent to year-end. 
D)  invoices dated a few days before and after year-end.

Question 6

Budd,the purchasing agent for Lake Hardware Wholesalers,has a relative who owns a retail hardware store.Budd arranged for hardware to be delivered by manufacturers to the retail store on a C.O.D. basis, thereby enabling his relative to buy at Lake's wholesale prices. Budd was probably able to accomplish this because of Lake's poor internal control over

Accepted Answer

A)  purchase requisitions. 
B)  cash receipts. 
C)  perpetual inventory records. 
D)  purchase orders. 
A)  purchase requisitions. 
B)  cash receipts. 
C)  perpetual inventory records. 
D)  purchase orders.

Question 7

In assessing control risk for purchases,an auditor vouches a sample of entries in the voucher register to the supporting documents.Which assertion would this test of controls most likely support?

Accepted Answer

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

Question 8

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 9

The accounts payable department is responsible for ensuring that all vendor invoices,cash disbursements,and adjustments are recorded in the accounts payable records.

Accepted Answer

A) True 
 B)False

Question 10

Operating control over the check signature plate normally should be the responsibility of the

Accepted Answer

A)  Secretary. 
B)  Chief accountant. 
C)  Vice President of Finance. 
D)  Treasurer. 
A)  Secretary. 
B)  Chief accountant. 
C)  Vice President of Finance. 
D)  Treasurer.

Question 11

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 12

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 13

The purchase journal is referred to as a check register.

Accepted Answer

A) True 
 B)False

Question 14

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 15

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 16

When an auditor selects a sample of items from the vouchers payable register for the last month of the period under audit and traces these items to underlying documents,the auditor is gathering evidence primarily in support of the assertion that

Accepted Answer

A)  recorded obligations were paid. 
B)  incurred obligations were recorded in the correct period. 
C)  recorded obligations were valid. 
D)  cash disbursements were recorded as incurred obligations. 
A)  recorded obligations were paid. 
B)  incurred obligations were recorded in the correct period. 
C)  recorded obligations were valid. 
D)  cash disbursements were recorded as incurred obligations.

Question 17

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 18

A purchase transaction usually begins with the preparation of a purchase order.

Accepted Answer

A) True 
 B)False

Question 19

The cash disbursements journal is also called the

Accepted Answer

A)  voucher register. 
B)  purchases journal. 
C)  check register. 
D)  accounts payable subsidiary ledger. 
A)  voucher register. 
B)  purchases journal. 
C)  check register. 
D)  accounts payable subsidiary ledger.

Question 20

Which of the following procedures would an auditor most likely perform in searching for unrecorded payables?

Accepted Answer

A)  Reconcile receiving reports with related cash payments made just prior to year-end. 
B)  Contrast the ratio of accounts payable to purchases with the prior year's ratio. 
C)  Vouch a sample of creditor balances to supporting invoices, receiving reports and purchase orders. 
D)  Compare cash payments occurring after the balance sheet date with the accounts payable trial balance. 
A)  Reconcile receiving reports with related cash payments made just prior to year-end. 
B)  Contrast the ratio of accounts payable to purchases with the prior year's ratio. 
C)  Vouch a sample of creditor balances to supporting invoices, receiving reports and purchase orders. 
D)  Compare cash payments occurring after the balance sheet date with the accounts payable trial balance.

Substantive procedures to examine the occurrence assertion for accounts payable include

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

The accounts payable department receives the purchase order form to accomplish all of the following except to:

Listed below are six assertions regarding the financial presentations made in the purchasing process.For each,give an example of how an auditor could use one of the typical documents in the purchasing process to test the assertion. Occurrence Completeness Authorization Accuracy Cutoff Classification

When searching for unrecorded liabilities at year-end,the population identified for sampling would be

In assessing control risk for purchases,an auditor vouches a sample of entries in the voucher register to the supporting documents.Which assertion would this test of controls most likely support?

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

The accounts payable department is responsible for ensuring that all vendor invoices,cash disbursements,and adjustments are recorded in the accounts payable records.

Operating control over the check signature plate normally should be the responsibility of the

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 describes a temporary difference?

The purchase journal is referred to as a check register.

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

When an auditor selects a sample of items from the vouchers payable register for the last month of the period under audit and traces these items to underlying documents,the auditor is gathering evidence primarily in support of the assertion that

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

A purchase transaction usually begins with the preparation of a purchase order.

The cash disbursements journal is also called the

Which of the following procedures would an auditor most likely perform in searching for unrecorded payables?

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 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

Professsional Conduct,Independence,and Quality Control

Legal Liability

Assurance,Attestation,amd Internal Auditing Services-professional Judgement Module

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Exam 11: Auditing the Purchasing Process

Substantive procedures to examine the occurrence assertion for accounts payable include

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

The accounts payable department receives the purchase order form to accomplish all of the following except to:

When searching for unrecorded liabilities at year-end,the population identified for sampling would be

In assessing control risk for purchases,an auditor vouches a sample of entries in the voucher register to the supporting documents.Which assertion would this test of controls most likely support?

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

The accounts payable department is responsible for ensuring that all vendor invoices,cash disbursements,and adjustments are recorded in the accounts payable records.

Operating control over the check signature plate normally should be the responsibility of the

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 describes a temporary difference?

The purchase journal is referred to as a check register.

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

When an auditor selects a sample of items from the vouchers payable register for the last month of the period under audit and traces these items to underlying documents,the auditor is gathering evidence primarily in support of the assertion that

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

A purchase transaction usually begins with the preparation of a purchase order.

The cash disbursements journal is also called the

Which of the following procedures would an auditor most likely perform in searching for unrecorded payables?

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 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

Professsional Conduct,Independence,and Quality Control

Legal Liability

Assurance,Attestation,amd Internal Auditing Services-professional Judgement Module

Filters