Question 1

Which of the following tests of details most likely would help an auditor determine whether accounts payable have been misstated?

Accepted Answer

A) Examining reported purchase returns that appear too low. 
B) Examining vendor statements for amounts not reported as purchases. 
C) Search for customer-returned goods that were not reported as returns. 
D) Reviewing bank transfers recorded as cash received from customers. 
A) Examining reported purchase returns that appear too low. 
B) Examining vendor statements for amounts not reported as purchases. 
C) Search for customer-returned goods that were not reported as returns. 
D) Reviewing bank transfers recorded as cash received from customers. B

Question 2

Which of the following audit procedures is aimed most directly at testing the completeness assertion for accounts payable?

Accepted Answer

A) Footing the list of accounts payable. 
B) Examining underlying documentation for cash disbursements in the period after year-end. 
C) Tracing shipping reports issued on or before year-end to related customer purchase orders and invoices. 
D) Tracing shipping reports after year-end to related customer purchase orders and invoices. 
A) Footing the list of accounts payable. 
B) Examining underlying documentation for cash disbursements in the period after year-end. 
C) Tracing shipping reports issued on or before year-end to related customer purchase orders and invoices. 
D) Tracing shipping reports after year-end to related customer purchase orders and invoices. B

Question 3

For effective internal control over accounts payable,the purchasing department should approve invoices for payment.

Accepted Answer

A) True 
 B)False  False

Question 4

Overstatement of financial results can involve failure to record a transaction.

Accepted Answer

A) True 
 B)False

Question 5

The assertion most directly addressed when performing the search for unrecorded liabilities is:

Accepted Answer

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

Question 6

A client recorded a payable for a large purchase twice.Which of the following controls would be most likely to detect this error in a timely and efficient manner?

Accepted Answer

A) Footing the purchases journal. 
B) Reconciling vendors' monthly statements with subsidiary payable ledger accounts. 
C) Tracing totals from the purchases journal to the ledger accounts. 
D) Sending written quarterly confirmations to all vendors. 
A) Footing the purchases journal. 
B) Reconciling vendors' monthly statements with subsidiary payable ledger accounts. 
C) Tracing totals from the purchases journal to the ledger accounts. 
D) Sending written quarterly confirmations to all vendors.

Question 7

Which of the following tests of controls most likely would help assure an auditor that goods shipped are properly billed?

Accepted Answer

A) Scan the sales journal for sequential and unusual entries. 
B) Examine shipping documents for matching sales invoices. 
C) Compare the accounts receivable ledger to daily sales summaries. 
D) Inspect unused sales invoices for consecutive prenumbering. 
A) Scan the sales journal for sequential and unusual entries. 
B) Examine shipping documents for matching sales invoices. 
C) Compare the accounts receivable ledger to daily sales summaries. 
D) Inspect unused sales invoices for consecutive prenumbering.

Question 8

Propex Corporation uses a voucher register and does not record invoices in a subsidiary ledger.Propex will probably benefit most from the additional cost of maintaining an accounts payable subsidiary ledger if:

Accepted Answer

A) There are usually invoices in an unmatched invoice file. 
B) Vendors' requests for confirmation of receivables often go unanswered for several months until paid invoices can be reviewed. 
C) Partial payments to vendors are continuously made in the ordinary course of business. 
D) It is difficult to reconcile vendors' monthly statements. 
A) There are usually invoices in an unmatched invoice file. 
B) Vendors' requests for confirmation of receivables often go unanswered for several months until paid invoices can be reviewed. 
C) Partial payments to vendors are continuously made in the ordinary course of business. 
D) It is difficult to reconcile vendors' monthly statements.

Question 9

The confirmation of accounts payable is most closely associated with:

Accepted Answer

A) Assertion risk. 
B) Detection risk. 
C) Inherent risk. 
D) Relative risk. 
A) Assertion risk. 
B) Detection risk. 
C) Inherent risk. 
D) Relative risk.

Question 10

An entity's internal control requires for every check request that there be an approved voucher,supported by a prenumbered purchase order,and a prenumbered receiving report.To determine whether checks are being issued for unauthorized expenditures,an auditor most likely would select for testing from the population of:

Accepted Answer

A) Purchase orders. 
B) Canceled checks. 
C) Receiving reports. 
D) Approved vouchers. 
A) Purchase orders. 
B) Canceled checks. 
C) Receiving reports. 
D) Approved vouchers.

Question 11

Assume that the auditors are concerned about disbursement transactions that have been recorded for improper amounts.Which procedure(s)would possibly identify these transactions? $\begin{array}{|l|c|c|}
\hline \text { Item } & \begin{array}{c}
\text { Trace from source } \
\text { documents to journals }
\end{array} & \begin{array}{c}
\text { Vouch from journal } \
\text { to source documents }
\end{array} \
\hline \text { A } & \text { No } & \text { No } \
\hline \text { B. } & \text { No } & \text { Yes } \
\hline \text { C. } & \text { Yes } & \text { No } \
\hline \text { D. } & \text { Yes } & \text { Yes } \
\hline
\end{array}$

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 12

Which of the following statements is correct regarding accounts payable and the auditor's procedures?

Accepted Answer

A) Because it can be difficult to discover a transaction that has not been recorded,the audit objective of completeness drives many of the substantive procedures applied to these balances. 
B) A judgment whether an unrecorded payable should be recorded before the financial statements are prepared depends entirely upon the source of the payable. 
C) The confirmation of accounts payable selected from the year-end trial balance of such accounts is most effective in discovering unrecorded liabilities. 
D) Unrecorded payables are often discovered through examining vouchers payable entered into the voucher register prior to the balance sheet date. 
A) Because it can be difficult to discover a transaction that has not been recorded,the audit objective of completeness drives many of the substantive procedures applied to these balances. 
B) A judgment whether an unrecorded payable should be recorded before the financial statements are prepared depends entirely upon the source of the payable. 
C) The confirmation of accounts payable selected from the year-end trial balance of such accounts is most effective in discovering unrecorded liabilities. 
D) Unrecorded payables are often discovered through examining vouchers payable entered into the voucher register prior to the balance sheet date.

Question 13

Confirmation of accounts payable is a required generally accepted auditing procedure.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following assertions is of principle concern to the auditors in the examination of accounts payable?

Accepted Answer

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

Question 15

Which of the following is a control procedure that is usually applied to accounts payable?

Accepted Answer

A) Periodic confirmation of accounts payable. 
B) Mailing statements to vendors detailing their account. 
C) Periodic aging of accounts payable. 
D) Matching invoices with receiving documents before disbursements are authorized. 
A) Periodic confirmation of accounts payable. 
B) Mailing statements to vendors detailing their account. 
C) Periodic aging of accounts payable. 
D) Matching invoices with receiving documents before disbursements are authorized.

Question 16

For good internal control,a copy of a receiving report should be sent to all of the following departments except:

Accepted Answer

A) Accounts payable. 
B) Purchasing. 
C) Stores. 
D) Shipping. 
A) Accounts payable. 
B) Purchasing. 
C) Stores. 
D) Shipping.

Question 17

Which of the following audit procedures is best for identifying unrecorded trade accounts payable?

Accepted Answer

A) Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payable applies to the prior period. 
B) Investigating payables recorded just prior to and just subsequent to the balance sheet date to determine whether they are supported by receiving reports. 
C) Examining unusual relationships between monthly accounts payable balances and recorded cash payments. 
D) Reconciling vendors' statements to the file of receiving reports to identify items received just prior to the balance sheet date. 
A) Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payable applies to the prior period. 
B) Investigating payables recorded just prior to and just subsequent to the balance sheet date to determine whether they are supported by receiving reports. 
C) Examining unusual relationships between monthly accounts payable balances and recorded cash payments. 
D) Reconciling vendors' statements to the file of receiving reports to identify items received just prior to the balance sheet date.

Question 18

A major concern of the auditors is obtaining evidence about the completeness of recorded accounts payable.
a.Describe the reason that the auditors are concerned with the completeness of accounts payable.
b.Describe three ways in which the auditors establish the completeness of accounts payable.

Accepted Answer

a.The auditors are concerned about compl

Question 19

Which of the following audit procedures is least likely to detect an unrecorded liability?

Accepted Answer

A) Analysis and recomputation of interest expense. 
B) Analysis and recomputation of depreciation expense. 
C) Mailing of a cash confirmation form. 
D) Reading of the minutes of meetings of the board of directors. 
A) Analysis and recomputation of interest expense. 
B) Analysis and recomputation of depreciation expense. 
C) Mailing of a cash confirmation form. 
D) Reading of the minutes of meetings of the board of directors.

Question 20

When an auditor finds a debit to accounts payable,which of the following accounts is most likely to be credited?

Accepted Answer

A) Accounts Receivable. 
B) Accrued liabilities. 
C) Cash. 
D) Cost of goods sold. 
A) Accounts Receivable. 
B) Accrued liabilities. 
C) Cash. 
D) Cost of goods sold.

Which of the following tests of details most likely would help an auditor determine whether accounts payable have been misstated?

Which of the following audit procedures is aimed most directly at testing the completeness assertion for accounts payable?

For effective internal control over accounts payable,the purchasing department should approve invoices for payment.

Overstatement of financial results can involve failure to record a transaction.

The assertion most directly addressed when performing the search for unrecorded liabilities is:

A client recorded a payable for a large purchase twice.Which of the following controls would be most likely to detect this error in a timely and efficient manner?

Which of the following tests of controls most likely would help assure an auditor that goods shipped are properly billed?

Propex Corporation uses a voucher register and does not record invoices in a subsidiary ledger.Propex will probably benefit most from the additional cost of maintaining an accounts payable subsidiary ledger if:

The confirmation of accounts payable is most closely associated with:

Assume that the auditors are concerned about disbursement transactions that have been recorded for improper amounts.Which procedure(s)would possibly identify these transactions? Item Trace from source documents to journals Vouch from journal to source documents A No No B. No Yes C. Yes No D. Yes Yes

Which of the following statements is correct regarding accounts payable and the auditor's procedures?

Confirmation of accounts payable is a required generally accepted auditing procedure.

Which of the following assertions is of principle concern to the auditors in the examination of accounts payable?

Which of the following is a control procedure that is usually applied to accounts payable?

For good internal control,a copy of a receiving report should be sent to all of the following departments except:

Which of the following audit procedures is best for identifying unrecorded trade accounts payable?

A major concern of the auditors is obtaining evidence about the completeness of recorded accounts payable. a.Describe the reason that the auditors are concerned with the completeness of accounts payable. b.Describe three ways in which the auditors establish the completeness of accounts payable.

Which of the following audit procedures is least likely to detect an unrecorded liability?

When an auditor finds a debit to accounts payable,which of the following accounts is most likely to be credited?

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of Cpas

Audit Evidence and Documentation

Audit Planning, understanding the Client, assessing Risks, and Responding

Internal Control

Consideration of Internal Control in an Information Technology Environment

Audit Sampling

Cash and Financial Investments

Accounts Receivable, notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property,plant,and Equipment: Depreciation and Depletion

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Reports

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, operational, and Compliance Auditing

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Exam 14: Accounts Payable and Other Liabilities

Which of the following tests of details most likely would help an auditor determine whether accounts payable have been misstated?

Which of the following audit procedures is aimed most directly at testing the completeness assertion for accounts payable?

For effective internal control over accounts payable,the purchasing department should approve invoices for payment.

Overstatement of financial results can involve failure to record a transaction.

The assertion most directly addressed when performing the search for unrecorded liabilities is:

A client recorded a payable for a large purchase twice.Which of the following controls would be most likely to detect this error in a timely and efficient manner?

Which of the following tests of controls most likely would help assure an auditor that goods shipped are properly billed?

Propex Corporation uses a voucher register and does not record invoices in a subsidiary ledger.Propex will probably benefit most from the additional cost of maintaining an accounts payable subsidiary ledger if:

The confirmation of accounts payable is most closely associated with:

Which of the following statements is correct regarding accounts payable and the auditor's procedures?

Confirmation of accounts payable is a required generally accepted auditing procedure.

Which of the following assertions is of principle concern to the auditors in the examination of accounts payable?

Which of the following is a control procedure that is usually applied to accounts payable?

For good internal control,a copy of a receiving report should be sent to all of the following departments except:

Which of the following audit procedures is best for identifying unrecorded trade accounts payable?

A major concern of the auditors is obtaining evidence about the completeness of recorded accounts payable. a.Describe the reason that the auditors are concerned with the completeness of accounts payable. b.Describe three ways in which the auditors establish the completeness of accounts payable.

Which of the following audit procedures is least likely to detect an unrecorded liability?

When an auditor finds a debit to accounts payable,which of the following accounts is most likely to be credited?

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of Cpas

Audit Evidence and Documentation

Audit Planning, understanding the Client, assessing Risks, and Responding

Internal Control

Consideration of Internal Control in an Information Technology Environment

Audit Sampling

Cash and Financial Investments

Accounts Receivable, notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property,plant,and Equipment: Depreciation and Depletion

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Reports

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, operational, and Compliance Auditing

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