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

The auditor may discover that the recorded cost of inventory exceeds the designated market price when testing which assertion?

The cash account is not part of the acquisitions and payment cycle.

For proper control, the receiving department should receive a copy of the purchase order that has the quantities blanked out.

Which assertion has the greatest emphasis when auditing accounts payable?

Which of the following would the auditor most likely do when testing the existence assertion for inventory?

The acquisition process begins with a purchase of goods or services.

Substantive tests of accounts payable and related expense accounts for valuation usually involve simply verifying the mathematical accuracy of the accounts, and agreeing them to general ledger and supporting documentation.

Which relationship might suggest a heightened risk of fraud in the acquisition and payment cycle?

In an audit where there is a heightened risk of fraud related to inventory, the auditor may want to observe all inventory locations simultaneously.

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

Which of the following is not a management assertion relevant to inventory?

Auditing accounts payable. What are the procedures available to auditors in auditing accounts payable and what level of assurance is obtained by each? Describe at least three. Which primary assertion is tested through these approaches?

An auditor may best test commissions expense for salespeople when control risk is low by performing which of the following procedures?

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

Accounting for inventories is a major consideration for many companies because of its significance to which of the following financial statements?

When testing a standard cost system, the auditor does not normally make which of the following inquiries?

Comparison of Controls in Traditional and Automated Systems. Discuss the differences between a traditional receiving system and an automated integrated receiving system.

When auditing expense accounts, which of the following would the auditor be least likely to subject to a detailed test of transactions?

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.

The acquisition and payment process consists of each of the following phases except which of the following?