Question 1

Which of the following is not an initial procedure for verifying accounts payable?

Accepted Answer

A)  trace the opening balance to the prior year's working papers (if applicable) 
B)  review activity in the general ledger account for any unusual entries 
C)  reconcile accounts to monthly supplier's statements 
D)  obtain a listing of amounts owed at the balance sheet date 
A)  trace the opening balance to the prior year's working papers (if applicable) 
B)  review activity in the general ledger account for any unusual entries 
C)  reconcile accounts to monthly supplier's statements 
D)  obtain a listing of amounts owed at the balance sheet date

Question 2

Which of these is not a procedure for identifying unrecorded liabilities?

Accepted Answer

A)  examination of the subsequent period's purchase and payment transactions 
B)  analytical procedures for expense and liability balances 
C)  examination of contractual commitments 
D)  confirmation of accounts payable 
A)  examination of the subsequent period's purchase and payment transactions 
B)  analytical procedures for expense and liability balances 
C)  examination of contractual commitments 
D)  confirmation of accounts payable

Question 3

The segregation of receiving goods from the requisitioning and purchasing of those
goods prevents those making requisitions from ordering goods directly from suppliers and
also prevents the purchasing department from gaining access to goods improperly ordered.

Accepted Answer

A) True 
 B)False

Question 4

Responsibility for updating of the personnel data master file should rest with authorized employees in the

Accepted Answer

A)  personnel department. 
B)  payroll department. 
C)  controller's department. 
D)  employee's operating department. 
A)  personnel department. 
B)  payroll department. 
C)  controller's department. 
D)  employee's operating department.

Question 5

Why are directors' and executive officers' remuneration considered to be audit sensitive?
What procedure could be used to check directors' and executive officers' remuneration?

Accepted Answer

Directors' and executive officers' remun

Question 6

Tests of details of transactions for payables balances include

Accepted Answer

A)  vouching recorded payables to supporting documentation. 
B)  confirming payables with major suppliers by reviewing the accounts payable ledger or accounts payable master file. 
C)  comparing financial statement presentation with applicable regulations and accounting standards. 
D)  verifying directors' and executive officers' remuneration. 
A)  vouching recorded payables to supporting documentation. 
B)  confirming payables with major suppliers by reviewing the accounts payable ledger or accounts payable master file. 
C)  comparing financial statement presentation with applicable regulations and accounting standards. 
D)  verifying directors' and executive officers' remuneration.

Question 7

Even though an employee's supervisor may initiate a request for payroll change, such as
a change in job classification or wage rate increase, all changes should be authorized in
writing by the personnel department before being entered into the personnel data master
file.

Accepted Answer

A) True 
 B)False

Question 8

Describe the audit process for purchase transactions. Indicate the audit risks that need to be addressed and the mitigating controls that can be implemented.

Accepted Answer

The audit process for purchase transacti

Question 9

Employees are generally hired by the company's purchasing department.

Accepted Answer

A) True 
 B)False

Question 10

Accounts payable is affected by purchase transactions that increase the account
balance and payment transactions that decrease the balance, thus, detection risk for
payables assertions is affected by the control and inherent risk factors related to both these
transaction classes.

Accepted Answer

A) True 
 B)False

Question 11

Wage rate increases should be authorized in writing by the

Accepted Answer

A)  payroll department. 
B)  personnel department. 
C)  finance department. 
D)  data entry department. 
A)  payroll department. 
B)  personnel department. 
C)  finance department. 
D)  data entry department.

Question 12

For the purchasing firm the processing of purchases and payment transactions requires all of the following functions except:

Accepted Answer

A)  requisitioning goods and services. 
B)  preparing purchase invoices. 
C)  preparing the cheque requisition. 
D)  All of the above functions are required. 
A)  requisitioning goods and services. 
B)  preparing purchase invoices. 
C)  preparing the cheque requisition. 
D)  All of the above functions are required.

Question 13

The correct statement in relation to purchase requisitions is:

Accepted Answer

A)  all purchase requisitions in the organization should originate from the warehouse. 
B)  all managers in the organization should be able to sign a requisition order. 
C)  the purchase requisition represents the start of the trail of documentary evidence in support of management's assertion as to the occurrence of the purchase transaction. 
D)  all of the above 
A)  all purchase requisitions in the organization should originate from the warehouse. 
B)  all managers in the organization should be able to sign a requisition order. 
C)  the purchase requisition represents the start of the trail of documentary evidence in support of management's assertion as to the occurrence of the purchase transaction. 
D)  all of the above

Question 14

Controls applicable to paying the payroll and protecting unclaimed wages include all of the following except

Accepted Answer

A)  payroll cheques and bank transfers should be signed or authorized by finance office personnel involved in preparing or recording the payroll. 
B)  payroll cheques, where used should be distributed to employees by finance office personnel not involved in preparing or recording the payroll. 
C)  any unclaimed payroll cheques should be stored in a safe or vault in the finance office. 
D)  finance office personnel should check the agreement of the names and amounts on cheques or bank transfers with payroll register entries. 
A)  payroll cheques and bank transfers should be signed or authorized by finance office personnel involved in preparing or recording the payroll. 
B)  payroll cheques, where used should be distributed to employees by finance office personnel not involved in preparing or recording the payroll. 
C)  any unclaimed payroll cheques should be stored in a safe or vault in the finance office. 
D)  finance office personnel should check the agreement of the names and amounts on cheques or bank transfers with payroll register entries.

Question 15

A check by the auditor on the numeric sequence of prenumbered receiving reports to determine that a supplier's invoice was recorded for each relates to the

Accepted Answer

A)  existence or occurrence assertion. 
B)  completeness assertion. 
C)  presentation assertion. 
D)  rights and obligations assertion. 
A)  existence or occurrence assertion. 
B)  completeness assertion. 
C)  presentation assertion. 
D)  rights and obligations assertion.

Question 16

A copy of the receiving report should be sent directly by the receiving department to the

Accepted Answer

A)  accounts (receivable) department. 
B)  chief financial controller. 
C)  purchasing department. 
D)  accounts (payable) department. 
A)  accounts (receivable) department. 
B)  chief financial controller. 
C)  purchasing department. 
D)  accounts (payable) department.

Question 17

Which of the following is least likely to be a function of the processing of purchase transactions?

Accepted Answer

A)  storing goods received for inventory 
B)  checking and approving the supplier's invoice 
C)  return to customers 
D)  receiving the goods 
A)  storing goods received for inventory 
B)  checking and approving the supplier's invoice 
C)  return to customers 
D)  receiving the goods

Question 18

In the audit of payroll, one of the key issues is to ensure that the payroll expense has
been properly recorded and the associated deductions for income tax, employee benefits,
and related liabilities are properly recorded as liabilities.

Accepted Answer

A) True 
 B)False

Question 19

On delivery of the goods to stores or other requisitioning departments, receiving clerks should obtain

Accepted Answer

A)  a signed receipt on the copy of the receiving report retained by the receiving department. 
B)  an original copy of the receiving report released by the receiving department. 
C)  a copy of the receiving report retained by the receiving department. 
D)  an authority for receiving report retained by the receiving department. 
A)  a signed receipt on the copy of the receiving report retained by the receiving department. 
B)  an original copy of the receiving report released by the receiving department. 
C)  a copy of the receiving report retained by the receiving department. 
D)  an authority for receiving report retained by the receiving department.

Question 20

The auditor knows that overstatements of payroll may result from unintentional errors or
fraud through payments to fictitious employees, payments to actual employees for hours not
worked, and payments to actual employees at higher than authorized rates.

Accepted Answer

A) True 
 B)False

Which of the following is not an initial procedure for verifying accounts payable?

Which of these is not a procedure for identifying unrecorded liabilities?

The segregation of receiving goods from the requisitioning and purchasing of those goods prevents those making requisitions from ordering goods directly from suppliers and also prevents the purchasing department from gaining access to goods improperly ordered.

Responsibility for updating of the personnel data master file should rest with authorized employees in the

Why are directors' and executive officers' remuneration considered to be audit sensitive? What procedure could be used to check directors' and executive officers' remuneration?

Tests of details of transactions for payables balances include

Even though an employee's supervisor may initiate a request for payroll change, such as a change in job classification or wage rate increase, all changes should be authorized in writing by the personnel department before being entered into the personnel data master file.

Describe the audit process for purchase transactions. Indicate the audit risks that need to be addressed and the mitigating controls that can be implemented.

Employees are generally hired by the company's purchasing department.

Accounts payable is affected by purchase transactions that increase the account balance and payment transactions that decrease the balance, thus, detection risk for payables assertions is affected by the control and inherent risk factors related to both these transaction classes.

Wage rate increases should be authorized in writing by the

For the purchasing firm the processing of purchases and payment transactions requires all of the following functions except:

The correct statement in relation to purchase requisitions is:

Controls applicable to paying the payroll and protecting unclaimed wages include all of the following except

A check by the auditor on the numeric sequence of prenumbered receiving reports to determine that a supplier's invoice was recorded for each relates to the

A copy of the receiving report should be sent directly by the receiving department to the

Which of the following is least likely to be a function of the processing of purchase transactions?

In the audit of payroll, one of the key issues is to ensure that the payroll expense has been properly recorded and the associated deductions for income tax, employee benefits, and related liabilities are properly recorded as liabilities.

On delivery of the goods to stores or other requisitioning departments, receiving clerks should obtain

The auditor knows that overstatements of payroll may result from unintentional errors or fraud through payments to fictitious employees, payments to actual employees for hours not worked, and payments to actual employees at higher than authorized rates.

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

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Exam 10: Auditing Purchases, Payables and Payroll

Which of the following is not an initial procedure for verifying accounts payable?

Which of these is not a procedure for identifying unrecorded liabilities?

The segregation of receiving goods from the requisitioning and purchasing of those goods prevents those making requisitions from ordering goods directly from suppliers and also prevents the purchasing department from gaining access to goods improperly ordered.

Responsibility for updating of the personnel data master file should rest with authorized employees in the

Why are directors' and executive officers' remuneration considered to be audit sensitive? What procedure could be used to check directors' and executive officers' remuneration?

Tests of details of transactions for payables balances include

Even though an employee's supervisor may initiate a request for payroll change, such as a change in job classification or wage rate increase, all changes should be authorized in writing by the personnel department before being entered into the personnel data master file.

Describe the audit process for purchase transactions. Indicate the audit risks that need to be addressed and the mitigating controls that can be implemented.

Employees are generally hired by the company's purchasing department.

Accounts payable is affected by purchase transactions that increase the account balance and payment transactions that decrease the balance, thus, detection risk for payables assertions is affected by the control and inherent risk factors related to both these transaction classes.

Wage rate increases should be authorized in writing by the

For the purchasing firm the processing of purchases and payment transactions requires all of the following functions except:

The correct statement in relation to purchase requisitions is:

Controls applicable to paying the payroll and protecting unclaimed wages include all of the following except

A check by the auditor on the numeric sequence of prenumbered receiving reports to determine that a supplier's invoice was recorded for each relates to the

A copy of the receiving report should be sent directly by the receiving department to the

Which of the following is least likely to be a function of the processing of purchase transactions?

In the audit of payroll, one of the key issues is to ensure that the payroll expense has been properly recorded and the associated deductions for income tax, employee benefits, and related liabilities are properly recorded as liabilities.

On delivery of the goods to stores or other requisitioning departments, receiving clerks should obtain

The auditor knows that overstatements of payroll may result from unintentional errors or fraud through payments to fictitious employees, payments to actual employees for hours not worked, and payments to actual employees at higher than authorized rates.

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