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

Inventory turnover is often calculated by the auditor for proper disclosure in client financial statements.

Which of the following is not an element of internal control for inventory?

Which of the following is an example of the type of analytical procedures that an auditor would use for inventory?

Which of the following is NOT a reason why inventory is a complex accounting and auditing area?

Which of the following procedures will usually be performed by the auditor to determine if obsolete inventory exists?

Prenumbered receiving documents establish the completeness of the population and are useful in determining that all goods are recorded in the correct period.

Proper internal control over the inventory account would require that inventory items should be reviewed for obsolescence and proper accounting treatment.

Inventory obsolescence procedures Identify and describe at least four procedures the audit team may perform in order to determine potential obsolescence of items in the inventory balances.

A networked software system linking a company's information system to vendors whose offerings and prices have been preapproved by appropriate management is called an automated purchasing system.

Valuation is the most complex assertion related to inventory.

Understatement of either purchases or ending inventory will result in a lower cost of goods sold and higher net income.

Which of the following would meet the need for additional control procedures when using computer-generated purchase orders?

When a purchasing agent benefits personally by accepting payment from a vendor,the purchasing agent is guilty of which of the following?

An auditor reviews purchase contracts to assess the conditions for the return of merchandise as a test related to which management assertion?

Which of the following is not an indicator of fraud in the acquisition and payment cycle?

The acquisition cycle begins with the receipt of goods and services and ends with their payment as reflected in cash disbursements.

Which of the following is not an item reviewed by the auditor to test the client's assertion related to the presentation and disclosure of inventory?

Management assertions for inventory and accounts payable Identify and describe the management assertions relevant to: (a)inventory and (b)accounts payable.Which assertion(s)is usually the most relevant for each account?

The internal control that requires that "checks are pre-numbered and accounted for" satisfies which assertion?

Which of the following is not an inherent risk associated with inventory?