Question 1

The Bill of Materials provides pricing information on all materials used in production.

Accepted Answer

A) True 
 B)False

Question 2

The sales forecast is the document that production uses to determine what to produce and when to produce it.

Accepted Answer

A) True 
 B)False

Question 3

To test the control assertion of completeness in the area of work-in-process inventory,the auditor most likely would

Accepted Answer

A)  select a sample of open and closed production cost reports and recalculate all costs entered. 
B)  select a sample of issue slips from the raw materials stores file and trace materials-used reports to production cost reports. 
C)  select a sample of open and closed production cost reports and vouch overhead charges to overhead analysis schedules. 
D)  select a sample of production orders and determine whether the production orders were authorized. 
A)  select a sample of open and closed production cost reports and recalculate all costs entered. 
B)  select a sample of issue slips from the raw materials stores file and trace materials-used reports to production cost reports. 
C)  select a sample of open and closed production cost reports and vouch overhead charges to overhead analysis schedules. 
D)  select a sample of production orders and determine whether the production orders were authorized.

Question 4

Which of the following methods for determining inventory cost is not allowed by GAAP?

Accepted Answer

A)  Average cost. 
B)  FIFO. 
C)  LIFO. 
D)  Standard cost. 
A)  Average cost. 
B)  FIFO. 
C)  LIFO. 
D)  Standard cost.

Question 5

An auditor's observation procedures for inventory may be performed during or after the end of the period under audit under which of the following conditions?

Accepted Answer

A)  When the client maintains periodic inventory records. 
B)  When the auditor finds minimal variations in client records and test counts in prior periods. 
C)  When total inventory has not varied more than 5% in the last five years. 
D)  When well-kept perpetual inventory records are checked by the client periodically by comparisons with physical counts. 
A)  When the client maintains periodic inventory records. 
B)  When the auditor finds minimal variations in client records and test counts in prior periods. 
C)  When total inventory has not varied more than 5% in the last five years. 
D)  When well-kept perpetual inventory records are checked by the client periodically by comparisons with physical counts.

Question 6

At the completion of the physical inventory,the auditors should inspect the inventory area to ensure that all inventory has been counted.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not an acceptable method of determining inventory cost under GAAP?

Accepted Answer

A)  FIFO. 
B)  LIFO. 
C)  Average cost. 
D)  All of the above are acceptable. 
A)  FIFO. 
B)  LIFO. 
C)  Average cost. 
D)  All of the above are acceptable.

Question 8

A client maintains perpetual inventory records in quantities and in dollars.If the assessed control risk is high,an auditor would probably

Accepted Answer

A)  apply gross profit tests to ascertain the reasonableness of the physical counts. 
B)  increase the extent of tests of controls relevant to the inventory cycle. 
C)  request the client to schedule the physical inventory count at the end of the year. 
D)  insist that the client perform physical counts of inventory items several times during the year. 
A)  apply gross profit tests to ascertain the reasonableness of the physical counts. 
B)  increase the extent of tests of controls relevant to the inventory cycle. 
C)  request the client to schedule the physical inventory count at the end of the year. 
D)  insist that the client perform physical counts of inventory items several times during the year.

Question 9

A production order usually includes a ________________________________.
Question also found in study guide

Accepted Answer

The answer of A production order usually includes a ________________________________.
Question...

Question 10

Tracing production cost accumulation forward into the production cost reports in the cost accounting department is a test for ____________________________.
Question also found in study guide

Accepted Answer

The answer of Tracing production cost accumulation forward into the...

Question 11

When testing a company's cost accounting system,the auditor uses procedures that are primarily designed to determine that

Accepted Answer

A)  quantities on hand have been computed based on acceptable cost accounting techniques that reasonably approximate actual quantities on hand. 
B)  physical inventories agree substantially with book inventories. 
C)  the system is in accordance with generally accepted accounting principles and is functioning as planned. 
D)  costs have been properly assigned to finished goods, work-in-process, and cost of goods sold. 
A)  quantities on hand have been computed based on acceptable cost accounting techniques that reasonably approximate actual quantities on hand. 
B)  physical inventories agree substantially with book inventories. 
C)  the system is in accordance with generally accepted accounting principles and is functioning as planned. 
D)  costs have been properly assigned to finished goods, work-in-process, and cost of goods sold.

Question 12

To gain assurance that all inventory items in a client's inventory listing schedule are valid,an auditor most likely would trace

Accepted Answer

A)  inventory tags noted during the auditor's observation to items in the inventory listing schedule. 
B)  inventory tags noted during the auditor's observation to items listed in receiving reports and vendors' invoices. 
C)  items in the inventory listing schedule to inventory tags and the auditor's recorded count sheets. 
D)  items in receiving reports and vendors' invoices to the inventory listing schedule. 
A)  inventory tags noted during the auditor's observation to items in the inventory listing schedule. 
B)  inventory tags noted during the auditor's observation to items listed in receiving reports and vendors' invoices. 
C)  items in the inventory listing schedule to inventory tags and the auditor's recorded count sheets. 
D)  items in receiving reports and vendors' invoices to the inventory listing schedule.

Question 13

_____________________________ can be used in connection with knowledge of the shape of management's plans for the year under audit.
Question also found in study guide

Accepted Answer

The answer of _____________________________ can be used in connection with...

Question 14

Inventory that is not used to produce finished goods should be accounted for as scrap inventory.

Accepted Answer

A) True 
 B)False

Question 15

Vouching a sample of items from the perpetual inventory records to the receiving reports achieves the specific ASB balance assertion of

Accepted Answer

A)  completeness. 
B)  occurrence. 
C)  presentation. 
D)  valuation. 
A)  completeness. 
B)  occurrence. 
C)  presentation. 
D)  valuation.

Question 16

The overall production starts with production planning,which usually is based on a _______________________________________.
Question also found in study guide

Accepted Answer

The answer of The overall production starts with production planning,which...

Question 17

Explain briefly the two directions of inventory test counts.
A. Basic transaction files to perpetual inventory records (completeness assertion).
B. Perpetual inventory records to the detail source documents (existence or occurrence assertion).

Accepted Answer

The inventory test counts can run from t

Question 18

Which of the following internal control activities most likely addresses the completeness assertion for inventory?

Accepted Answer

A)  The work-in-process account is periodically reconciled with subsidiary inventory records. 
B)  Employees responsible for custody of finished goods do not perform the receiving function. 
C)  Receiving reports are prenumbered and the numbering sequence is checked periodically. 
D)  There is a separation of duties between the payroll department and inventory accounting personnel. 
A)  The work-in-process account is periodically reconciled with subsidiary inventory records. 
B)  Employees responsible for custody of finished goods do not perform the receiving function. 
C)  Receiving reports are prenumbered and the numbering sequence is checked periodically. 
D)  There is a separation of duties between the payroll department and inventory accounting personnel.

Question 19

An auditor reviews job cost sheets to test which transaction assertion?

Accepted Answer

A)  Occurrence. 
B)  Completeness. 
C)  Accuracy. 
D)  Classification. 
A)  Occurrence. 
B)  Completeness. 
C)  Accuracy. 
D)  Classification.

Question 20

At the beginning of the observation of the inventory count,the auditor records the last bill of lading used by the company to

Accepted Answer

A)  search for unrecorded sales. 
B)  test inventory cut-off. 
C)  verify inventory ownership. 
D)  record the inventory valuation of items received. 
A)  search for unrecorded sales. 
B)  test inventory cut-off. 
C)  verify inventory ownership. 
D)  record the inventory valuation of items received.

The Bill of Materials provides pricing information on all materials used in production.

The sales forecast is the document that production uses to determine what to produce and when to produce it.

To test the control assertion of completeness in the area of work-in-process inventory,the auditor most likely would

Which of the following methods for determining inventory cost is not allowed by GAAP?

An auditor's observation procedures for inventory may be performed during or after the end of the period under audit under which of the following conditions?

At the completion of the physical inventory,the auditors should inspect the inventory area to ensure that all inventory has been counted.

Which of the following is not an acceptable method of determining inventory cost under GAAP?

A client maintains perpetual inventory records in quantities and in dollars.If the assessed control risk is high,an auditor would probably

A production order usually includes a ________________________________. Question also found in study guide

Tracing production cost accumulation forward into the production cost reports in the cost accounting department is a test for ____________________________. Question also found in study guide

When testing a company's cost accounting system,the auditor uses procedures that are primarily designed to determine that

To gain assurance that all inventory items in a client's inventory listing schedule are valid,an auditor most likely would trace

_____________________________ can be used in connection with knowledge of the shape of management's plans for the year under audit. Question also found in study guide

Inventory that is not used to produce finished goods should be accounted for as scrap inventory.

Vouching a sample of items from the perpetual inventory records to the receiving reports achieves the specific ASB balance assertion of

The overall production starts with production planning,which usually is based on a _______________________________________. Question also found in study guide

Explain briefly the two directions of inventory test counts. A. Basic transaction files to perpetual inventory records (completeness assertion). B. Perpetual inventory records to the detail source documents (existence or occurrence assertion).

Which of the following internal control activities most likely addresses the completeness assertion for inventory?

An auditor reviews job cost sheets to test which transaction assertion?

At the beginning of the observation of the inventory count,the auditor records the last bill of lading used by the company to

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

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Exam 9: Production Cycle

The Bill of Materials provides pricing information on all materials used in production.

The sales forecast is the document that production uses to determine what to produce and when to produce it.

To test the control assertion of completeness in the area of work-in-process inventory,the auditor most likely would

Which of the following methods for determining inventory cost is not allowed by GAAP?

An auditor's observation procedures for inventory may be performed during or after the end of the period under audit under which of the following conditions?

At the completion of the physical inventory,the auditors should inspect the inventory area to ensure that all inventory has been counted.

Which of the following is not an acceptable method of determining inventory cost under GAAP?

A client maintains perpetual inventory records in quantities and in dollars.If the assessed control risk is high,an auditor would probably

A production order usually includes a ________________________________. Question also found in study guide

Tracing production cost accumulation forward into the production cost reports in the cost accounting department is a test for ____________________________. Question also found in study guide

When testing a company's cost accounting system,the auditor uses procedures that are primarily designed to determine that

To gain assurance that all inventory items in a client's inventory listing schedule are valid,an auditor most likely would trace

_____________________________ can be used in connection with knowledge of the shape of management's plans for the year under audit. Question also found in study guide

Inventory that is not used to produce finished goods should be accounted for as scrap inventory.

Vouching a sample of items from the perpetual inventory records to the receiving reports achieves the specific ASB balance assertion of

The overall production starts with production planning,which usually is based on a _______________________________________. Question also found in study guide

Explain briefly the two directions of inventory test counts. A. Basic transaction files to perpetual inventory records (completeness assertion). B. Perpetual inventory records to the detail source documents (existence or occurrence assertion).

Which of the following internal control activities most likely addresses the completeness assertion for inventory?

An auditor reviews job cost sheets to test which transaction assertion?

At the beginning of the observation of the inventory count,the auditor records the last bill of lading used by the company to

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits governmental Audits and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters