Question 1

The control objective associated with selecting a sample of receiving reports and tracing them to the perpetual inventory records is ________.

Accepted Answer

A) accuracy 
B) completeness 
C) validity 
D) classification 
A) accuracy 
B) completeness 
C) validity 
D) classification

Question 2

Briefly explain why the auditor's inventory tests counts are conducted in two directions.

Accepted Answer

To test for completeness,the auditor's t

Question 3

What issues must the auditor consider if the client has inventory located away from the client's place of business?

Accepted Answer

The auditor must determine where the inv

Question 4

If the auditor traces a sample of receiving reports to the perpetual inventory records,the auditor is testing the control of validity.

Accepted Answer

A) True 
 B)False

Question 5

Identify situations when the auditor should use accounts payable confirmations and discuss whether they are required to use them.

Accepted Answer

In general,the auditors are not required

Question 6

"Observe if personnel in the purchasing department are following company policies" is an audit procedure intended to test which control objective?

Accepted Answer

A) Environment. 
B) Accuracy. 
C) Accounting and posting. 
D) Proper period recording. 
A) Environment. 
B) Accuracy. 
C) Accounting and posting. 
D) Proper period recording.

Question 7

Which control objective is associated with observing the inventory record-keeping personnel as they perform their work?

Accepted Answer

A) Authorization. 
B) Completeness. 
C) Environment. 
D) Accuracy. 
A) Authorization. 
B) Completeness. 
C) Environment. 
D) Accuracy.

Question 8

The accounts payable trial balance should not include vendors with nonzero balances.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) Reconcile receiving reports with related cash payments made just prior to year-end. 
B) Compare 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) Compare 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.

Question 10

In "Amortize the 'Drum' Slowly",Candid Production overvalued net assets by taking too little amortization.Which of the following was the lesson for the auditors in this case?

Accepted Answer

A) Check the client's calculations regardless of how simple they appear. 
B) Understand special industry accounting before accepting an engagement. 
C) Maintain professional skepticism when evaluating a client's accounting estimates. 
D) Always investigate a client's background before accepting an engagement. 
A) Check the client's calculations regardless of how simple they appear. 
B) Understand special industry accounting before accepting an engagement. 
C) Maintain professional skepticism when evaluating a client's accounting estimates. 
D) Always investigate a client's background before accepting an engagement.

Question 11

When the auditor selects a sample of inventory items from the perpetual inventory master file then searches out these items in the inventory warehouse,the auditor is collecting evidence to support which assertion?

Accepted Answer

A) Presentation. 
B) Valuation. 
C) Completeness. 
D) Existence. 
A) Presentation. 
B) Valuation. 
C) Completeness. 
D) Existence.

Question 12

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

Accepted Answer

A) Completeness. 
B) Existence or occurrence. 
C) Valuation or allocation. 
D) Presentation 
A) Completeness. 
B) Existence or occurrence. 
C) Valuation or allocation. 
D) Presentation

Question 13

When auditing merchandise inventory at year-end,the auditor performs a purchase cutoff test to obtain evidence that ________.

Accepted Answer

A) all goods purchased before year-end are received before the physical inventory count 
B) goods held on consignment for customers are not included in the inventory balance 
C) the stock of inventory on hand at year-end is neither pledged nor sold 
D) all goods owned at year-end are included in the inventory balance 
A) all goods purchased before year-end are received before the physical inventory count 
B) goods held on consignment for customers are not included in the inventory balance 
C) the stock of inventory on hand at year-end is neither pledged nor sold 
D) all goods owned at year-end are included in the inventory balance

Question 14

The requirement that "perpetual inventory records must be updated as of the date goods are received" is an example of a control that satisfies the "proper period" internal control objective.

Accepted Answer

A) True 
 B)False

Question 15

Why are payables vouchers marked "paid" after cheques have been issued in payment of vendor invoices?

Accepted Answer

To show that they have been pr

Question 16

Quantities recorded during the physical count of inventories are greater than the quantities in the perpetual records.This could be the result of a failure to record ________.

Accepted Answer

A) sales 
B) sales discounts 
C) purchases 
D) purchase discounts 
A) sales 
B) sales discounts 
C) purchases 
D) purchase discounts

Question 17

Purchase cutoff procedures should be designed to produce evidence about whether or not merchandise that is included in the inventory of the company ________.

Accepted Answer

A) has been paid for 
B) is physically present in the warehouse 
C) is owned by the company (legal title has been transferred) 
D) relates to the shipping documents for the merchandise issued in the company's name 
A) has been paid for 
B) is physically present in the warehouse 
C) is owned by the company (legal title has been transferred) 
D) relates to the shipping documents for the merchandise issued in the company's name

The control objective associated with selecting a sample of receiving reports and tracing them to the perpetual inventory records is ________.

Briefly explain why the auditor's inventory tests counts are conducted in two directions.

What issues must the auditor consider if the client has inventory located away from the client's place of business?

If the auditor traces a sample of receiving reports to the perpetual inventory records,the auditor is testing the control of validity.

Identify situations when the auditor should use accounts payable confirmations and discuss whether they are required to use them.

"Observe if personnel in the purchasing department are following company policies" is an audit procedure intended to test which control objective?

Which control objective is associated with observing the inventory record-keeping personnel as they perform their work?

The accounts payable trial balance should not include vendors with nonzero balances.

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

In "Amortize the 'Drum' Slowly",Candid Production overvalued net assets by taking too little amortization.Which of the following was the lesson for the auditors in this case?

When the auditor selects a sample of inventory items from the perpetual inventory master file then searches out these items in the inventory warehouse,the auditor is collecting evidence to support which assertion?

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

When auditing merchandise inventory at year-end,the auditor performs a purchase cutoff test to obtain evidence that ________.

The requirement that "perpetual inventory records must be updated as of the date goods are received" is an example of a control that satisfies the "proper period" internal control objective.

Why are payables vouchers marked "paid" after cheques have been issued in payment of vendor invoices?

Quantities recorded during the physical count of inventories are greater than the quantities in the perpetual records.This could be the result of a failure to record ________.

Purchase cutoff procedures should be designed to produce evidence about whether or not merchandise that is included in the inventory of the company ________.

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

The Revenues, Receivables, and Receipts Process and Cash Account Balance

Payroll and Production Processes

The Finance and Investment Process

hapter 15 Completing the Audit Work

Applying Professional Judgment to Form the Audit Opinion and Issue the Audit Report

Other Public Accounting Services and Reportsreviews and Compilations

Professional Rules of Conduct Details and Auditor Responsibilities

The Audit of Accounting Estimates: Basic Material Relating to Accounting Estimates

Legal Liability Cases

Other Professional Accounting Services and Reports, Including Fraud Auditing

Filters

Exam 12: The Purchases, Payables, and Payments Process

The control objective associated with selecting a sample of receiving reports and tracing them to the perpetual inventory records is ________.

Briefly explain why the auditor's inventory tests counts are conducted in two directions.

What issues must the auditor consider if the client has inventory located away from the client's place of business?

If the auditor traces a sample of receiving reports to the perpetual inventory records,the auditor is testing the control of validity.

Identify situations when the auditor should use accounts payable confirmations and discuss whether they are required to use them.

"Observe if personnel in the purchasing department are following company policies" is an audit procedure intended to test which control objective?

Which control objective is associated with observing the inventory record-keeping personnel as they perform their work?

The accounts payable trial balance should not include vendors with nonzero balances.

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

In "Amortize the 'Drum' Slowly",Candid Production overvalued net assets by taking too little amortization.Which of the following was the lesson for the auditors in this case?

When the auditor selects a sample of inventory items from the perpetual inventory master file then searches out these items in the inventory warehouse,the auditor is collecting evidence to support which assertion?

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

When auditing merchandise inventory at year-end,the auditor performs a purchase cutoff test to obtain evidence that ________.

The requirement that "perpetual inventory records must be updated as of the date goods are received" is an example of a control that satisfies the "proper period" internal control objective.

Why are payables vouchers marked "paid" after cheques have been issued in payment of vendor invoices?

Quantities recorded during the physical count of inventories are greater than the quantities in the perpetual records.This could be the result of a failure to record ________.

Purchase cutoff procedures should be designed to produce evidence about whether or not merchandise that is included in the inventory of the company ________.

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

The Revenues, Receivables, and Receipts Process and Cash Account Balance

Payroll and Production Processes

The Finance and Investment Process

hapter 15 Completing the Audit Work

Applying Professional Judgment to Form the Audit Opinion and Issue the Audit Report

Other Public Accounting Services and Reportsreviews and Compilations

Professional Rules of Conduct Details and Auditor Responsibilities

The Audit of Accounting Estimates: Basic Material Relating to Accounting Estimates

Legal Liability Cases

Other Professional Accounting Services and Reports, Including Fraud Auditing

Filters