Question 1

Product costs should be matched directly with specific transactions and are recognized upon recognition of revenue.

Accepted Answer

A) True 
 B)False

Question 2

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 3

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

Accepted Answer

A) True 
 B)False

Question 4

Which of the following audit procedures is least likely to detect an unrecorded liability?

Accepted Answer

A)  Analysis and recomputation of interest expense. 
B)  Analysis and recomputation of depreciation expense. 
C)  Mailing of standard bank confirmation forms. 
D)  Reading of the minutes of meetings of the board of directors. 
A)  Analysis and recomputation of interest expense. 
B)  Analysis and recomputation of depreciation expense. 
C)  Mailing of standard bank confirmation forms. 
D)  Reading of the minutes of meetings of the board of directors.

Question 5

After the controls are tested,the auditor sets the achieved level of control risk.

Accepted Answer

A) True 
 B)False

Question 6

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 7

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 8

Assertions about classes of transactions and events for the period under audit include

Accepted Answer

A)  existence, completeness, and accuracy. 
B)  existence, completeness, and classification. 
C)  occurrence, completeness, and cutoff. 
D)  occurrence, completeness, and valuation and allocation. 
A)  existence, completeness, and accuracy. 
B)  existence, completeness, and classification. 
C)  occurrence, completeness, and cutoff. 
D)  occurrence, completeness, and valuation and allocation.

Question 9

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 10

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.

Question 11

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 12

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 13

Which of the following procedures would an auditor least likely perform before the balance sheet date?

Accepted Answer

A)  Assessment of inherent risk. 
B)  Observation of merchandise inventory. 
C)  Assessment of control risk. 
D)  Identification of related parties. 
A)  Assessment of inherent risk. 
B)  Observation of merchandise inventory. 
C)  Assessment of control risk. 
D)  Identification of related parties.

Question 14

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 15

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 16

Listed below are the major functions of the purchasing process.
1)Purchasing function.
2)General ledger function.
3)Invoice-processing function.
4)Disbursement function.
5)Accounts payable function.
6)Requisition and receiving function.
Name four pairs of functions that should be segregated from each other and explain why the segregation is important.

Accepted Answer

1 should be separated from 6 - An indivi

Question 17

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

Accepted Answer

A)  Trace a sample of accounts payable entries recorded just before year-end to the unmatched receiving report file. 
B)  Compare a sample of purchase orders issued just after year-end with the year-end accounts payable trial balance. 
C)  Vouch a sample of cash disbursements recorded just after year-end to receiving reports and vendor invoices. 
D)  Scan the cash disbursements entries recorded just before year-end for indications of unusual transactions. 
A)  Trace a sample of accounts payable entries recorded just before year-end to the unmatched receiving report file. 
B)  Compare a sample of purchase orders issued just after year-end with the year-end accounts payable trial balance. 
C)  Vouch a sample of cash disbursements recorded just after year-end to receiving reports and vendor invoices. 
D)  Scan the cash disbursements entries recorded just before year-end for indications of unusual transactions.

Question 18

A debit memo

Accepted Answer

A)  reduces the amount of accounts payable due 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 due 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 19

Tests of controls for the occurrence assertion for purchases include all of the following except:

Accepted Answer

A)  evaluating proper segregation of duties. 
B)  testing a sample of vouchers for an authorized purchase order. 
C)  testing a sample of vouchers for matching receiving reports. 
D)  tracing a sample of vouchers to purchases journal. 
A)  evaluating proper segregation of duties. 
B)  testing a sample of vouchers for an authorized purchase order. 
C)  testing a sample of vouchers for matching receiving reports. 
D)  tracing a sample of vouchers to purchases journal.

Question 20

A product cost is

Accepted Answer

A)  an expense allocated by a systematic procedure. 
B)  recognized during the period in which a liability is incurred. 
C)  recognized in the period during which related revenue is recognized. 
D)  recognized in the period in which cash is spent. 
A)  an expense allocated by a systematic procedure. 
B)  recognized during the period in which a liability is incurred. 
C)  recognized in the period during which related revenue is recognized. 
D)  recognized in the period in which cash is spent.

Product costs should be matched directly with specific transactions and are recognized upon recognition of revenue.

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

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

Which of the following audit procedures is least likely to detect an unrecorded liability?

After the controls are tested,the auditor sets the achieved level of control risk.

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?

The occurrence assertion for accounts payable includes

Assertions about classes of transactions and events for the period under audit include

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

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

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

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

Which of the following procedures would an auditor least likely perform before the balance sheet date?

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

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

A debit memo

Tests of controls for the occurrence assertion for purchases include all of the following except:

A product cost is

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

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Exam 11: Auditing the Purchasing Process

Product costs should be matched directly with specific transactions and are recognized upon recognition of revenue.

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

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

Which of the following audit procedures is least likely to detect an unrecorded liability?

After the controls are tested,the auditor sets the achieved level of control risk.

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?

The occurrence assertion for accounts payable includes

Assertions about classes of transactions and events for the period under audit include

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

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

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

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

Which of the following procedures would an auditor least likely perform before the balance sheet date?

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

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

A debit memo

Tests of controls for the occurrence assertion for purchases include all of the following except:

A product cost is

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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