Exam 11: Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Sources of information regarding a client's inventory obsolescence can be partially noted during the inventory observation.

The auditor may test a manufacturing client's cost system to substantiate the valuation of inventory.

Which of the following is a major factor in management's ability to overvalue inventory without rapid detection by auditors?

One reason for observing inventory is to determine the accuracy of client counting procedures.

Cycle counts involve periodic testing of the accuracy of the perpetual inventory records.

In observing the client's inventory at year-end,the auditor makes test counts that are later traced into the client's inventory compilation.

An auditor may best test commissions expense for salespeople when control risk is low by performing which of the following procedures?

Bar code scanning may best be utilized in the receiving process to accomplish which of the following?

Substantive tests of accounts payable and related expense accounts for valuation usually involve simply verifying the mathematical accuracy of the accounts and agreeing them to general ledger and supporting documentation.

A primary feature of automated control in the acquisition cycle includes which of the following?

Supply chain management has helped many companies improve the efficiency of operations.

Which of the following would the auditor most likely do when testing the valuation assertion for inventory?

Which of the following is a significant risk related to purchasing?

A perpetual inventory system is preferable to a periodic system if adequately controlled and maintained because of which of the following?

Which of the following is not a standard procedure that the auditor normally should follow in the observation of inventory at year-end?

The tracing of a sample of receiving reports through the recording process tests the completeness assertion.

In computerized purchasing operations,the computer matches three documents-the purchase order,the receiving report,and the monthly statement-and if the three match within a prespecified tolerable limit,the invoice is approved for payment.

Which of the following procedures would the auditor perform in testing the completeness assertion for accounts payable?

When auditing expense accounts,which of the following would the auditor be least likely to subject to a detailed test of transactions?

Which of the following is a procedure used in an audit where there is a heightened risk of fraud related to accounts payable and other related expense accounts?