Question 1

An audit team would most likely examine the detail support for which of the following charges?

Accepted Answer

A)  Payroll expense
B)  Cost of goods sold
C)  Supplies expense
D)  Legal expense.

Question 2

A liability for a long-term purchase contract should generally be recognized when

Accepted Answer

A)  the contract is signed.
B)  the goods are shipped.
C)  the goods are received.
D)  the goods are sold to match the cost.

Question 3

Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities?

Accepted Answer

A)  Trace a sample of accounts payable entries recorded just before year-end to the unmatched receiving report file.
B)  Compare a sample of purchase orders issued just after year-end with the year-end accounts payable trial balance.
C)  Vouch a sample of cash disbursements recorded just after year-end to receiving reports and vendor invoices.
D)  Scan the cash disbursements entries recorded just before year-end for indications of unusual transactions.

Question 4

The _______ is the primary original record for payroll accounting.

Accepted Answer

The answer of The _______ is the primary original record...

Question 5

Vendor invoices should be compared to _______ and _______ to determine that the vendor is charging the approved price and for quantity received.

Accepted Answer

[purchase ...

Question 6

Vouchers should be stamped PAID to

Accepted Answer

A)  prevent duplicate payment.
B)  generate a new purchase order.
C)  indicate posting in the voucher register.
D)  facilitate preparation of the bank reconciliation.

Question 7

_______ consist of (1) identification of data population for audit and (2) an expression of the action to be taken to produce relevant audit evidence.

Accepted Answer

The answer of _______ consist of (1) identification of data...

Question 8

An auditor most likely would extend substantive tests of payroll when

Accepted Answer

A)  payroll is extensively audited by the state government.
B)  payroll expense is substantially higher than in the prior year.
C)  overpayments are discovered in performing tests of controls.
D)  employees complain to management about too much overtime.

Question 9

An auditor wishes to perform tests of controls on a client's purchasing procedures. If the control activities leave no audit trail of documentary evidence, the auditor most likely will test the procedures by

Accepted Answer

A)  confirmation and observation.
B)  observation and inquiry.
C)  analytical procedures and confirmation.
D)  inquiry and analytical procedures.

Question 10

An internal control questionnaire for payroll processing occurrence assertion would not include which of the following questions?

Accepted Answer

A)  Are names of terminated employees reported in writing to the payroll department?
B)  Is the payroll compared to personnel files periodically?
C)  Are checks distributed by the employee's immediate supervisor?
D)  Are all wage rates determined by contract or approved by a personnel officer?.

Question 11

Which of the following departments most likely would approve changes in pay rates and deductions from employee salaries?

Accepted Answer

A)  Personnel
B)  Treasurer
C)  Controller
D)  Payroll

Question 12

Which of the following would not overstate current-period net income?

Accepted Answer

A)  Capitalizing an expenditure that should be expensed
B)  Failing to record a liability for an expenditure
C)  Failing to record a check paying an item in vouchers payable.
D)  All of these would overstate net income

Question 13

Computer controls that might be found in an advanced online acquisition and expenditure system would not include

Accepted Answer

A)  all vendor invoices are prenumbered and the numbers accounted for.
B)  each terminal performs only designated functions.
C)  an identification number and password are required to enter the nonautomatic purchase orders.
D)  the check signature is printed using a signature plate that is installed on the computer printer only when checks are printed.

Question 14

The auditor decided to test accounts payable by sending open-ended (blank)  confirmations to selected vendors. The auditor's best approach in selecting the vendor accounts to confirm is to

Accepted Answer

A)  select vendor accounts with large balances.
B)  select vendor accounts at random in order to apply a statistical sampling procedure.
C)  select vendor accounts based on the number of purchases from vendors during the year.
D)  select vendor accounts that are past due.

Question 15

Which of the following is not a major control risk in the payroll cycle?

Accepted Answer

A)  Paying fictitious "employees"
B)  Overpaying for time or production
C)  Losing employees to competitors.
D)  Incorrect accounting for costs or expenses

Question 16

Small Corporation uses a Wages Clearing Account for its payroll disbursements. At the end of February, a reasonably large debit balance remained in this account. The most likely reason for this is that

Accepted Answer

A)  more labor cost had been assigned to the expense accounts than had been paid.
B)  some labor cost had not been properly classified in the expense accounts.
C)  some employees had not yet cashed their checks.
D)  not enough cash had been transferred to the bank account.

Question 17

When performing procedures in a search of unrecorded liabilities, auditors can utilize various sources of evidence/information (e.g., documents, files, management and clerical personnel).Required:List at least five, but not more than seven, sources of evidence/information for the search for unrecorded liabilities.(Do not write procedures. Do not take time to write about particular evidence that can be obtained or reasons for using the sources.)

Accepted Answer

Inquiry of client personnel, open purcha...

Question 18

Which of the following accounts does not appear in the acquisition and expenditure cycle?

Accepted Answer

A)  Cash
B)  Purchases Returns
C)  Sales Returns
D)  Prepaid Insurance

Question 19

"Recorded vouchers (accounts payable entries)  in the voucher register (e.g., purchases journal)  supported by completed voucher documentation" is a specific example of which management assertion?

Accepted Answer

A)  Classification
B)  Occurrence
C)  Completeness
D)  Cutoff

Question 20

A personnel file should establish the reality of a person's _______ and _______.

Accepted Answer

[existence...

Exam 8: Acquisition and Expenditure Cycle 336

Computer controls that might be found in an advanced online acquisition and expenditure system would not include

Correct Answer
verified

"Recorded vouchers (accounts payable entries) in the voucher register (e.g., purchases journal) supported by completed voucher documentation" is a specific example of which management assertion?

Correct Answer
verified

The _______ is the primary original record for payroll accounting.

Correct Answer
verified

_______ consist of (1) identification of data population for audit and (2) an expression of the action to be taken to produce relevant audit evidence.

Correct Answer
verified

A personnel file should establish the reality of a person's _ and _.

Correct Answer
verified
[existence...
View Answer

An internal control questionnaire for payroll processing occurrence assertion would not include which of the following questions?

Correct Answer
verified

Which of the following is not a major control risk in the payroll cycle?

Correct Answer
verified

An auditor wishes to perform tests of controls on a client's purchasing procedures. If the control activities leave no audit trail of documentary evidence, the auditor most likely will test the procedures by

Correct Answer
verified

Small Corporation uses a Wages Clearing Account for its payroll disbursements. At the end of February, a reasonably large debit balance remained in this account. The most likely reason for this is that

Correct Answer
verified

A liability for a long-term purchase contract should generally be recognized when

Correct Answer
verified

Which of the following accounts does not appear in the acquisition and expenditure cycle?

Correct Answer
verified

Vendor invoices should be compared to _ and _ to determine that the vendor is charging the approved price and for quantity received.

Correct Answer
verified
[purchase ...
View Answer

Correct Answer
verified
Inquiry of client personnel, open purcha...
View Answer

The auditor decided to test accounts payable by sending open-ended (blank) confirmations to selected vendors. The auditor's best approach in selecting the vendor accounts to confirm is to

Correct Answer
verified

Which of the following departments most likely would approve changes in pay rates and deductions from employee salaries?

Correct Answer
verified

Vouchers should be stamped PAID to

Correct Answer
verified

An audit team would most likely examine the detail support for which of the following charges?

Correct Answer
verified

Which of the following would not overstate current-period net income?

Correct Answer
verified

An auditor most likely would extend substantive tests of payroll when

Correct Answer
verified

Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities?

Correct Answer
verified

Exam 8: Acquisition and Expenditure Cycle 336

Computer controls that might be found in an advanced online acquisition and expenditure system would not include

Correct AnswerverifiedShow Answer

"Recorded vouchers (accounts payable entries) in the voucher register (e.g., purchases journal) supported by completed voucher documentation" is a specific example of which management assertion?

Correct AnswerverifiedShow Answer

The _______ is the primary original record for payroll accounting.

Correct AnswerverifiedShow Answer

_______ consist of (1) identification of data population for audit and (2) an expression of the action to be taken to produce relevant audit evidence.

Correct AnswerverifiedShow Answer

A personnel file should establish the reality of a person's _______ and _______.

Correct Answerverified[existence...View AnswerShow Answer

An internal control questionnaire for payroll processing occurrence assertion would not include which of the following questions?

Correct AnswerverifiedShow Answer

Which of the following is not a major control risk in the payroll cycle?

Correct AnswerverifiedShow Answer

An auditor wishes to perform tests of controls on a client's purchasing procedures. If the control activities leave no audit trail of documentary evidence, the auditor most likely will test the procedures by

Correct AnswerverifiedShow Answer

Small Corporation uses a Wages Clearing Account for its payroll disbursements. At the end of February, a reasonably large debit balance remained in this account. The most likely reason for this is that

Correct AnswerverifiedShow Answer

A liability for a long-term purchase contract should generally be recognized when

Correct AnswerverifiedShow Answer

Which of the following accounts does not appear in the acquisition and expenditure cycle?

Correct AnswerverifiedShow Answer

Vendor invoices should be compared to _______ and _______ to determine that the vendor is charging the approved price and for quantity received.

Correct Answerverified[purchase ...View AnswerShow Answer

Correct AnswerverifiedInquiry of client personnel, open purcha...View AnswerShow Answer

The auditor decided to test accounts payable by sending open-ended (blank) confirmations to selected vendors. The auditor's best approach in selecting the vendor accounts to confirm is to

Correct AnswerverifiedShow Answer

Which of the following departments most likely would approve changes in pay rates and deductions from employee salaries?

Correct AnswerverifiedShow Answer

Vouchers should be stamped PAID to

Correct AnswerverifiedShow Answer

An audit team would most likely examine the detail support for which of the following charges?

Correct AnswerverifiedShow Answer

Which of the following would not overstate current-period net income?

Correct AnswerverifiedShow Answer

An auditor most likely would extend substantive tests of payroll when

Correct AnswerverifiedShow Answer

Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

A personnel file should establish the reality of a person's _ and _.

Correct Answer
verified
[existence...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Vendor invoices should be compared to _ and _ to determine that the vendor is charging the approved price and for quantity received.

Correct Answer
verified
[purchase ...
View Answer

Correct Answer
verified
Inquiry of client personnel, open purcha...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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