Question 1

Auditors should be aware that a voucher system may result in which of the following at year-end:

Accepted Answer

A) Understatement of liabilities. 
B) Overstatement of assets. 
C) Understatement of owners' equity. 
D) Overstatement of expenses. 
A) Understatement of liabilities. 
B) Overstatement of assets. 
C) Understatement of owners' equity. 
D) Overstatement of expenses.

Question 2

Unrecorded liabilities are most likely to be found during the review of which of the following documents?

Accepted Answer

A) Unpaid bills. 
B) Shipping records. 
C) Bills of lading. 
D) Unmatched sales invoices. 
A) Unpaid bills. 
B) Shipping records. 
C) Bills of lading. 
D) Unmatched sales invoices.

Question 3

Information regarding the proper cutoff of accounts payable is generally obtained in conjunction with the audit of inventories.

Accepted Answer

A) True 
 B)False

Question 4

When the auditors select a sample from the vouchers payable register at the end of the period and trace them to underlying documents,the auditors are gathering evidence primarily to support that:

Accepted Answer

A) Recorded obligations were paid. 
B) Incurred obligations were recorded in the correct period. 
C) Recorded obligations occurred prior to year-end. 
D) Cash disbursements were recorded as incurred obligation. 
A) Recorded obligations were paid. 
B) Incurred obligations were recorded in the correct period. 
C) Recorded obligations occurred prior to year-end. 
D) Cash disbursements were recorded as incurred obligation.

Question 5

Based on the company and its environment,including its internal control,the auditors assessed the risk of material misstatements to the financial statements,whether due to error or fraud,and designed the nature,timing,and extent of further audit procedures to be performed.
As a result of conducting the above risk assessment procedures,the audit plan for year 2 includes the following changes from the audit plan for year 1.The company has a calendar year-end and operates only on weekdays.
In conducting the audit procedures for the search for unrecorded liabilities,the materiality/scope for this area was assessed by the auditors at $6,000.Adjustments are only recorded for items equal to,or exceeding materiality.The last day of fieldwork is estimated to be February 1,year 3.
For the items reflected in the following check register,which are not recorded in the accounts payable subsidiary ledger at December 31,year 2,determine if each potential liability is recorded in the proper accounting period and also determine the amount that should be journalized,if any.If no action is required,you must enter $0.
For each of the check numbers in the table below,select if any action or adjustment is required. If no action is required,put $0 in the amount column;if an adjustment is needed select the dollar amount.Each selection may be used once,more than once,or not at all.
Check Register

Accepted Answer

The answer of Based on the company and its environment,including...

Question 6

Auditors may choose not to confirm accounts payable because:

Accepted Answer

A) Confirmation obtains evidence identical to that obtained by cutoff tests. 
B) Other reliable external evidence to support the balances is likely to be available. 
C) A reading of the corporate minutes reveals that confirmation is unnecessary. 
D) The balances due will have changed between the year-end and the date of confirmation. 
A) Confirmation obtains evidence identical to that obtained by cutoff tests. 
B) Other reliable external evidence to support the balances is likely to be available. 
C) A reading of the corporate minutes reveals that confirmation is unnecessary. 
D) The balances due will have changed between the year-end and the date of confirmation.

Question 7

With properly designed internal control,the same employee should not be permitted to:

Accepted Answer

A) Sign checks and cancel supporting documents. 
B) Receive merchandise and prepare a receiving report. 
C) Prepare disbursement vouchers and sign checks. 
D) Initiate a request to order merchandise and approve merchandise received. 
A) Sign checks and cancel supporting documents. 
B) Receive merchandise and prepare a receiving report. 
C) Prepare disbursement vouchers and sign checks. 
D) Initiate a request to order merchandise and approve merchandise received.

Question 8

A likely analytical procedure to test the accuracy of purchase discounts would be to compute the ratio of cash discounts earned to:

Accepted Answer

A) Accounts payable. 
B) Notes payable. 
C) Purchases. 
D) Sales discounts. 
A) Accounts payable. 
B) Notes payable. 
C) Purchases. 
D) Sales discounts.

Question 9

Which of the following is an example of an accrued liability?

Accepted Answer

A) Accounts payable. 
B) Notes payable. 
C) Prepaid insurance. 
D) Interest payable. 
A) Accounts payable. 
B) Notes payable. 
C) Prepaid insurance. 
D) Interest payable.

Question 10

Most of the audit work on accounts payable is typically performed:

Accepted Answer

A) Before the balance sheet date. 
B) At the balance sheet date in conjunction with inventory cutoff tests. 
C) After the balance sheet date. 
D) Simultaneously with the audit of accrued liabilities. 
A) Before the balance sheet date. 
B) At the balance sheet date in conjunction with inventory cutoff tests. 
C) After the balance sheet date. 
D) Simultaneously with the audit of accrued liabilities.

Question 11

Which of the following manipulations would understate accounts payable on the financial statements?

Accepted Answer

A) Overstatement of purchases. 
B) Closing the cash disbursements journal prior to year-end. 
C) Leaving the cash receipts journal open after year-end. 
D) Omission of expenses. 
A) Overstatement of purchases. 
B) Closing the cash disbursements journal prior to year-end. 
C) Leaving the cash receipts journal open after year-end. 
D) Omission of expenses.

Question 12

Which of the following best describes a voucher prepared under good internal control?

Accepted Answer

A) A document prepared by Stores that indicates amount to be purchased. 
B) A document prepared by Receiving that indicates the quantity received and approves payment. 
C) A document prepared by Accounts Payable authorizing a cash disbursement. 
D) A document received by Purchasing,from a supplier,indicating quantity of goods purchased and amount due. 
A) A document prepared by Stores that indicates amount to be purchased. 
B) A document prepared by Receiving that indicates the quantity received and approves payment. 
C) A document prepared by Accounts Payable authorizing a cash disbursement. 
D) A document received by Purchasing,from a supplier,indicating quantity of goods purchased and amount due.

Question 13

Auditors generally consider the evidence regarding accounts payable in the client's possession as less reliable than that for accounts receivable.

Accepted Answer

A) True 
 B)False

Question 14

The auditor will most likely perform extensive tests for possible understatement of:

Accepted Answer

A) Revenues. 
B) Assets. 
C) Liabilities. 
D) Capital. 
A) Revenues. 
B) Assets. 
C) Liabilities. 
D) Capital.

Question 15

Operating control over check signing normally should be the responsibility of the:

Accepted Answer

A) Secretary. 
B) Chief accountant. 
C) Vice-president of marketing. 
D) Treasurer. 
A) Secretary. 
B) Chief accountant. 
C) Vice-president of marketing. 
D) Treasurer.

Question 16

The form typically used to confirm accounts payable:

Accepted Answer

A) Does not require a response from the vendor. 
B) Confirms the balance recorded by the client at year-end. 
C) Requires the vendor to indicate the amount of the payable. 
D) Is the same as the form used to confirm accounts receivable. 
A) Does not require a response from the vendor. 
B) Confirms the balance recorded by the client at year-end. 
C) Requires the vendor to indicate the amount of the payable. 
D) Is the same as the form used to confirm accounts receivable.

Question 17

Which of the following procedures is least likely to be completed before the balance sheet date?

Accepted Answer

A) Observation of inventory. 
B) Review of internal control over cash disbursements. 
C) Search for unrecorded liabilities. 
D) Confirmation of receivables. 
A) Observation of inventory. 
B) Review of internal control over cash disbursements. 
C) Search for unrecorded liabilities. 
D) Confirmation of receivables.

Auditors should be aware that a voucher system may result in which of the following at year-end:

Unrecorded liabilities are most likely to be found during the review of which of the following documents?

Information regarding the proper cutoff of accounts payable is generally obtained in conjunction with the audit of inventories.

When the auditors select a sample from the vouchers payable register at the end of the period and trace them to underlying documents,the auditors are gathering evidence primarily to support that:

Auditors may choose not to confirm accounts payable because:

With properly designed internal control,the same employee should not be permitted to:

A likely analytical procedure to test the accuracy of purchase discounts would be to compute the ratio of cash discounts earned to:

Which of the following is an example of an accrued liability?

Most of the audit work on accounts payable is typically performed:

Which of the following manipulations would understate accounts payable on the financial statements?

Which of the following best describes a voucher prepared under good internal control?

Auditors generally consider the evidence regarding accounts payable in the client's possession as less reliable than that for accounts receivable.

The auditor will most likely perform extensive tests for possible understatement of:

Operating control over check signing normally should be the responsibility of the:

The form typically used to confirm accounts payable:

Which of the following procedures is least likely to be completed before the balance sheet date?

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

Auditors should be aware that a voucher system may result in which of the following at year-end:

Unrecorded liabilities are most likely to be found during the review of which of the following documents?

Information regarding the proper cutoff of accounts payable is generally obtained in conjunction with the audit of inventories.

When the auditors select a sample from the vouchers payable register at the end of the period and trace them to underlying documents,the auditors are gathering evidence primarily to support that:

Auditors may choose not to confirm accounts payable because:

With properly designed internal control,the same employee should not be permitted to:

A likely analytical procedure to test the accuracy of purchase discounts would be to compute the ratio of cash discounts earned to:

Which of the following is an example of an accrued liability?

Most of the audit work on accounts payable is typically performed:

Which of the following manipulations would understate accounts payable on the financial statements?

Which of the following best describes a voucher prepared under good internal control?

Auditors generally consider the evidence regarding accounts payable in the client's possession as less reliable than that for accounts receivable.

The auditor will most likely perform extensive tests for possible understatement of:

Operating control over check signing normally should be the responsibility of the:

The form typically used to confirm accounts payable:

Which of the following procedures is least likely to be completed before the balance sheet date?

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

Filters