Question 1

Which of the following expense accounts would not normally be tested by listing all debits and examining any significant items?

Accepted Answer

A)  Legal expense. 
B)  Miscellaneous expense. 
C)  Repairs and Maintenance. 
D)  Payroll expense. 
A)  Legal expense. 
B)  Miscellaneous expense. 
C)  Repairs and Maintenance. 
D)  Payroll expense.

Question 2

Substantive tests of account balances in the payroll cycle are likely to include the following procedures except

Accepted Answer

A)  analytical review procedures. 
B)  recalculation of accruals. 
C)  comparison of accruals to subsequent payments. 
D)  detail vouching of payroll expense entries. 
A)  analytical review procedures. 
B)  recalculation of accruals. 
C)  comparison of accruals to subsequent payments. 
D)  detail vouching of payroll expense entries.

Question 3

The permanent reference files (master files)in a personnel and payroll database ordinarily do not include which of the following?

Accepted Answer

A)  Deduction table. 
B)  Payroll master. 
C)  Compensation table. 
D)  Employee earning record. 
A)  Deduction table. 
B)  Payroll master. 
C)  Compensation table. 
D)  Employee earning record.

Question 4

An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal.The purpose of this substantive audit procedure most likely was to

Accepted Answer

A)  identify usually large purchases that should be investigated further. 
B)  verify that cash disbursements were for goods actually received. 
C)  determine that purchases were properly recorded. 
D)  test whether payments were for goods actually ordered. 
A)  identify usually large purchases that should be investigated further. 
B)  verify that cash disbursements were for goods actually received. 
C)  determine that purchases were properly recorded. 
D)  test whether payments were for goods actually ordered.

Question 5

____________________________________ consist of (1)identification of data population for audit and (2)an expression of the action to be taken to produce relevant audit evidence.
Question also found in study guide

Accepted Answer

The answer of ____________________________________ consist of (1)identification of data population...

Question 6

An auditor is planning the testing of the accounts payable balance.The auditor's main concerns should be

Accepted Answer

A)  existence and accuracy. 
B)  completeness and cutoff. 
C)  occurrence and cutoff. 
D)  valuation and accuracy.
Question also found in study guide 
A)  existence and accuracy. 
B)  completeness and cutoff. 
C)  occurrence and cutoff. 
D)  valuation and accuracy.
Question also found in study guide

Question 7

Which of the following situations represents an internal control weakness in the payroll department?

Accepted Answer

A)  Payroll department personnel are rotated in their duties. 
B)  Paychecks are distributed by the employees' immediate supervisor. 
C)  Payroll records are reconciled with quarterly tax reports. 
D)  The timekeeping function is independent of the payroll department. 
A)  Payroll department personnel are rotated in their duties. 
B)  Paychecks are distributed by the employees' immediate supervisor. 
C)  Payroll records are reconciled with quarterly tax reports. 
D)  The timekeeping function is independent of the payroll department.

Question 8

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

Accepted Answer

A)  Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payables apply 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 payables apply 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 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. 
A)  confirmation and observation. 
B)  observation and inquiry. 
C)  analytical procedures and confirmation. 
D)  inquiry and analytical procedures.

Question 10

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

Question 11

The internal control questionnaire for purchases and accounts payable includes the following questions.Next to each of the questions,indicate the letter of the related transaction assertion.
A. Occurrence
B. Completeness
C. Accuracy
D. Classification
E. Cutoff

Accepted Answer

1.C; 2.A;

Question 12

The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the

Accepted Answer

A)  human resources function from the controllership function. 
B)  administrative controls from the internal accounting controls. 
C)  authorization of transactions from the custody of related assets. 
D)  operational responsibility from the record keeping responsibility. 
A)  human resources function from the controllership function. 
B)  administrative controls from the internal accounting controls. 
C)  authorization of transactions from the custody of related assets. 
D)  operational responsibility from the record keeping responsibility.

Question 13

A client's purchasing system ends with the recording of a liability and its eventual payment.Which of the following best describes auditors' primary concern with respect to liabilities resulting from the purchasing system?

Accepted Answer

A)  Accounts payable are not materially understated. 
B)  Authority to incur liabilities is restricted to one designated person. 
C)  Acquisition of materials is not made from one vendor or one group of vendors. 
D)  Commitments for all purchases are made only after established competitive bidding procedures are followed. 
A)  Accounts payable are not materially understated. 
B)  Authority to incur liabilities is restricted to one designated person. 
C)  Acquisition of materials is not made from one vendor or one group of vendors. 
D)  Commitments for all purchases are made only after established competitive bidding procedures are followed.

Question 14

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. 
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 15

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? 
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 16

Changes to the payroll master file should be approved by human resources department.

Accepted Answer

A) True 
 B)False

Question 17

The test of controls for payroll includes the following audit procedures.Next to each of the procedures,indicate the related management assertion about transactions.

Accepted Answer

1.classification; 2.occurrence

Question 18

Which of the following functional responsibilities would not typically relate to salaried employees?

Accepted Answer

A)  Collecting timekeeping data. 
B)  Supervision. 
C)  Personnel or labor relations. 
D)  Payroll distribution. 
A)  Collecting timekeeping data. 
B)  Supervision. 
C)  Personnel or labor relations. 
D)  Payroll distribution.

Question 19

Which of the following accounts would most likely be reviewed by the auditor to gain reasonable assurance that additions to the equipment account are not understated?

Accepted Answer

A)  Depreciation expense. 
B)  Gain on disposal of equipment. 
C)  Accounts payable. 
D)  Repairs and maintenance expense. 
A)  Depreciation expense. 
B)  Gain on disposal of equipment. 
C)  Accounts payable. 
D)  Repairs and maintenance expense.

Question 20

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 purchas

Which of the following expense accounts would not normally be tested by listing all debits and examining any significant items?

Substantive tests of account balances in the payroll cycle are likely to include the following procedures except

The permanent reference files (master files)in a personnel and payroll database ordinarily do not include which of the following?

An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal.The purpose of this substantive audit procedure most likely was to

____________________________________ consist of (1)identification of data population for audit and (2)an expression of the action to be taken to produce relevant audit evidence. Question also found in study guide

An auditor is planning the testing of the accounts payable balance.The auditor's main concerns should be

Which of the following situations represents an internal control weakness in the payroll department?

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

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

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

The internal control questionnaire for purchases and accounts payable includes the following questions.Next to each of the questions,indicate the letter of the related transaction assertion. A. Occurrence B. Completeness C. Accuracy D. Classification E. Cutoff

The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the

A client's purchasing system ends with the recording of a liability and its eventual payment.Which of the following best describes auditors' primary concern with respect to liabilities resulting from the purchasing system?

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

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

Changes to the payroll master file should be approved by human resources department.

The test of controls for payroll includes the following audit procedures.Next to each of the procedures,indicate the related management assertion about transactions.

Which of the following functional responsibilities would not typically relate to salaried employees?

Which of the following accounts would most likely be reviewed by the auditor to gain reasonable assurance that additions to the equipment account are not understated?

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

Production 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

Exam 8: Acquisition and Expenditure Cycle

Which of the following expense accounts would not normally be tested by listing all debits and examining any significant items?

Substantive tests of account balances in the payroll cycle are likely to include the following procedures except

The permanent reference files (master files)in a personnel and payroll database ordinarily do not include which of the following?

An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal.The purpose of this substantive audit procedure most likely was to

____________________________________ consist of (1)identification of data population for audit and (2)an expression of the action to be taken to produce relevant audit evidence. Question also found in study guide

An auditor is planning the testing of the accounts payable balance.The auditor's main concerns should be

Which of the following situations represents an internal control weakness in the payroll department?

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

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

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

The internal control questionnaire for purchases and accounts payable includes the following questions.Next to each of the questions,indicate the letter of the related transaction assertion. A. Occurrence B. Completeness C. Accuracy D. Classification E. Cutoff

The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the

A client's purchasing system ends with the recording of a liability and its eventual payment.Which of the following best describes auditors' primary concern with respect to liabilities resulting from the purchasing system?

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

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

Changes to the payroll master file should be approved by human resources department.

The test of controls for payroll includes the following audit procedures.Next to each of the procedures,indicate the related management assertion about transactions.

Which of the following functional responsibilities would not typically relate to salaried employees?

Which of the following accounts would most likely be reviewed by the auditor to gain reasonable assurance that additions to the equipment account are not understated?

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

Production 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