Question 1

Purchase requisitions may originate from

Accepted Answer

A)  personnel manager, for plant and equipment. 
B)  the warehouse, for inventory. 
C)  purchases for a delivery vehicle. 
D)  both b and c 
A)  personnel manager, for plant and equipment. 
B)  the warehouse, for inventory. 
C)  purchases for a delivery vehicle. 
D)  both b and c B

Question 2

A programmed routine in the edit run for payroll lists all employees who worked more than 50 hours during the week for review. This is an example of a

Accepted Answer

A)  reasonableness test. 
B)  validity test. 
C)  sequence test. 
D)  self-checking test. 
A)  reasonableness test. 
B)  validity test. 
C)  sequence test. 
D)  self-checking test. A

Question 3

Factors relating to the internal control environment that the auditor needs to consider when assessing control risk for purchase, payment and payroll transactions include all of these except

Accepted Answer

A)  integrity and ethical values. 
B)  management's commitment to competence. 
C)  design of substantive procedures. 
D)  assignment of authority and responsibility. 
A)  integrity and ethical values. 
B)  management's commitment to competence. 
C)  design of substantive procedures. 
D)  assignment of authority and responsibility. C

Question 4

The third stage of applying analytical procedures is to

Accepted Answer

A)  identify absolute changes in amounts between the current year and the prior year. 
B)  use ratios and trends. 
C)  make an objective assessment regarding usability of analytical procedures. 
D)  document expected and unexpected changes. 
A)  identify absolute changes in amounts between the current year and the prior year. 
B)  use ratios and trends. 
C)  make an objective assessment regarding usability of analytical procedures. 
D)  document expected and unexpected changes.

Question 5

A proper cut-off of payment transactions at the year end, such as verifying and
examining the date of cheques outstanding as at the end of the reporting period, is essential
to the correct presentation of cash and accounts payable at the end of the reporting period.

Accepted Answer

A) True 
 B)False

Question 6

The control related to the completeness assertion is

Accepted Answer

A)  determining the mathematical accuracy of the suppliers' invoices. 
B)  serially numbering suppliers' invoices on receipt so that subsequent checks of numerical continuity can confirm that all invoices are recorded. 
C)  preparing a daily prelist of suppliers' invoices approved for payment. 
D)  coding the account distributions on the suppliers' invoices. 
A)  determining the mathematical accuracy of the suppliers' invoices. 
B)  serially numbering suppliers' invoices on receipt so that subsequent checks of numerical continuity can confirm that all invoices are recorded. 
C)  preparing a daily prelist of suppliers' invoices approved for payment. 
D)  coding the account distributions on the suppliers' invoices.

Question 7

Accounts payable is usually the smallest current liability on the balance sheet and a
insignificant factor in the evaluation of an entity's short-term solvency, especially when the
accounts payable is affected by a high volume of transactions and thus is susceptible to
misstatements.

Accepted Answer

A) True 
 B)False

Question 8

The receiving department should be instructed to accept no goods without having on file a properly authorized

Accepted Answer

A)  purchase requisition. 
B)  invoice. 
C)  receiving report. 
D)  purchase order. 
A)  purchase requisition. 
B)  invoice. 
C)  receiving report. 
D)  purchase order.

Question 9

In most modern organizations, employee timekeeping data is recorded via

Accepted Answer

A)  employee badges. 
B)  time-clock cards. 
C)  security identification cards. 
D)  sign-in/sign-off book. 
A)  employee badges. 
B)  time-clock cards. 
C)  security identification cards. 
D)  sign-in/sign-off book.

Question 10

Tests of details of balances for payables include all of the following except

Accepted Answer

A)  reconciling payables with monthly statements received by the entity from suppliers. 
B)  confirming accounts payable. 
C)  searching for unrecorded liabilities. 
D)  verifying directors' and executive officers' remuneration. 
A)  reconciling payables with monthly statements received by the entity from suppliers. 
B)  confirming accounts payable. 
C)  searching for unrecorded liabilities. 
D)  verifying directors' and executive officers' remuneration.

Question 11

An important consideration in assessing inherent risk for purchase transactions is any motivation management may have to misstate expenditure. Which of the following is not a factor that may contribute to misstatement?

Accepted Answer

A)  the need to achieve announced profitability targets. 
B)  the need to disclose concern over control problems. 
C)  temptations for employees to make unauthorized purchases. 
D)  temptations for employees to misappropriate purchased assets. 
A)  the need to achieve announced profitability targets. 
B)  the need to disclose concern over control problems. 
C)  temptations for employees to make unauthorized purchases. 
D)  temptations for employees to misappropriate purchased assets.

Question 12

A purchase order is a form issued by the supplier detailing the goods or services supplied
and the amount owing.

Accepted Answer

A) True 
 B)False

Question 13

Responsibility for determining that unpaid supplier's invoices are processed for payment on their due dates generally lies with the

Accepted Answer

A)  warehouse department. 
B)  accounts payable department. 
C)  purchasing department. 
D)  internal audit department. 
A)  warehouse department. 
B)  accounts payable department. 
C)  purchasing department. 
D)  internal audit department.

Question 14

Payroll functions include all of the following except

Accepted Answer

A)  preparing attendance and timekeeping data. 
B)  authorized payroll changes. 
C)  terminating employees. 
D)  All of the above are payroll functions. 
A)  preparing attendance and timekeeping data. 
B)  authorized payroll changes. 
C)  terminating employees. 
D)  All of the above are payroll functions.

Question 15

Explain the nature and use of an imprest payroll account.

Accepted Answer

It is an account that only has payroll t

Question 16

A responsibility not normally assigned to receiving department personnel is to

Accepted Answer

A)  compare goods received with description of goods ordered. 
B)  prepare a prenumbered receiving report for every order received. 
C)  enter cheque requisition data and verify the batch total. 
D)  file the purchase order copy pending arrival of goods. 
A)  compare goods received with description of goods ordered. 
B)  prepare a prenumbered receiving report for every order received. 
C)  enter cheque requisition data and verify the batch total. 
D)  file the purchase order copy pending arrival of goods.

Question 17

Purchase and payroll transactions account for the major expenses incurred by a
business, and so are a major component in the determination of profit, and also relate to the
acquisition of major classes of asset including inventories and capital assets.

Accepted Answer

A) True 
 B)False

Question 18

Controls over the preparation and signing of cheques include all of the following except

Accepted Answer

A)  authorized personnel in the accounting department should be responsible for signing the cheques. 
B)  the cheque requisition and supporting documents should be cancelled (stamped) when the cheque is signed. 
C)  the signed cheque and the supporting documents should be returned to the accounts payable clerk for review and mailing. 
D)  prenumbered cheques should be used. 
A)  authorized personnel in the accounting department should be responsible for signing the cheques. 
B)  the cheque requisition and supporting documents should be cancelled (stamped) when the cheque is signed. 
C)  the signed cheque and the supporting documents should be returned to the accounts payable clerk for review and mailing. 
D)  prenumbered cheques should be used.

Question 19

Identify key controls that ought to be in place for the preparation and signing of cheques.

Accepted Answer

-Authorized finance department personnel

Question 20

A purchases cut-off test would satisfy the audit objective assertion of

Accepted Answer

A)  classification. 
B)  rights and obligations. 
C)  completeness 
D)  none of the above 
A)  classification. 
B)  rights and obligations. 
C)  completeness 
D)  none of the above

Purchase requisitions may originate from

A programmed routine in the edit run for payroll lists all employees who worked more than 50 hours during the week for review. This is an example of a

Factors relating to the internal control environment that the auditor needs to consider when assessing control risk for purchase, payment and payroll transactions include all of these except

The third stage of applying analytical procedures is to

A proper cut-off of payment transactions at the year end, such as verifying and examining the date of cheques outstanding as at the end of the reporting period, is essential to the correct presentation of cash and accounts payable at the end of the reporting period.

The control related to the completeness assertion is

Accounts payable is usually the smallest current liability on the balance sheet and a insignificant factor in the evaluation of an entity's short-term solvency, especially when the accounts payable is affected by a high volume of transactions and thus is susceptible to misstatements.

The receiving department should be instructed to accept no goods without having on file a properly authorized

In most modern organizations, employee timekeeping data is recorded via

Tests of details of balances for payables include all of the following except

An important consideration in assessing inherent risk for purchase transactions is any motivation management may have to misstate expenditure. Which of the following is not a factor that may contribute to misstatement?

A purchase order is a form issued by the supplier detailing the goods or services supplied and the amount owing.

Responsibility for determining that unpaid supplier's invoices are processed for payment on their due dates generally lies with the

Payroll functions include all of the following except

Explain the nature and use of an imprest payroll account.

A responsibility not normally assigned to receiving department personnel is to

Purchase and payroll transactions account for the major expenses incurred by a business, and so are a major component in the determination of profit, and also relate to the acquisition of major classes of asset including inventories and capital assets.

Controls over the preparation and signing of cheques include all of the following except

Identify key controls that ought to be in place for the preparation and signing of cheques.

A purchases cut-off test would satisfy the audit objective assertion of

Introduction and Review of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Audit Planning I

Audit Planning II

Audit Evidence

Sampling and Overview of the Risk Response Phase of the Audit

Understanding and Testing the Clients System of Internal Controls

Execution of the Audit Performing Substantive Procedures

Auditing Sales and Receivables

Auditing Inventories and PPE

Auditing Cash and Investments

Completing and Reporting on the Audit

Filters

Exam 10: Auditing Purchases, Payables and Payroll

Purchase requisitions may originate from

A programmed routine in the edit run for payroll lists all employees who worked more than 50 hours during the week for review. This is an example of a

Factors relating to the internal control environment that the auditor needs to consider when assessing control risk for purchase, payment and payroll transactions include all of these except

The third stage of applying analytical procedures is to

A proper cut-off of payment transactions at the year end, such as verifying and examining the date of cheques outstanding as at the end of the reporting period, is essential to the correct presentation of cash and accounts payable at the end of the reporting period.

The control related to the completeness assertion is

Accounts payable is usually the smallest current liability on the balance sheet and a insignificant factor in the evaluation of an entity's short-term solvency, especially when the accounts payable is affected by a high volume of transactions and thus is susceptible to misstatements.

The receiving department should be instructed to accept no goods without having on file a properly authorized

In most modern organizations, employee timekeeping data is recorded via

Tests of details of balances for payables include all of the following except

An important consideration in assessing inherent risk for purchase transactions is any motivation management may have to misstate expenditure. Which of the following is not a factor that may contribute to misstatement?

A purchase order is a form issued by the supplier detailing the goods or services supplied and the amount owing.

Responsibility for determining that unpaid supplier's invoices are processed for payment on their due dates generally lies with the

Payroll functions include all of the following except

Explain the nature and use of an imprest payroll account.

A responsibility not normally assigned to receiving department personnel is to

Purchase and payroll transactions account for the major expenses incurred by a business, and so are a major component in the determination of profit, and also relate to the acquisition of major classes of asset including inventories and capital assets.

Controls over the preparation and signing of cheques include all of the following except

Identify key controls that ought to be in place for the preparation and signing of cheques.

A purchases cut-off test would satisfy the audit objective assertion of

Introduction and Review of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Audit Planning I

Audit Planning II

Audit Evidence

Sampling and Overview of the Risk Response Phase of the Audit

Understanding and Testing the Clients System of Internal Controls

Execution of the Audit Performing Substantive Procedures

Auditing Sales and Receivables

Auditing Inventories and PPE

Auditing Cash and Investments

Completing and Reporting on the Audit

Filters