Question 1

Effective control over the cash payroll function would mandate which of the following?

Accepted Answer

A)  The payroll clerk should fill the envelopes with cash and include a computation of the net wages. 
B)  The paymaster should be retain unclaimed payroll envelopes. 
C)  Each employee should be asked to sign a receipt for wages received. 
D)  A separate checking account for payroll should be maintained. 
A)  The payroll clerk should fill the envelopes with cash and include a computation of the net wages. 
B)  The paymaster should be retain unclaimed payroll envelopes. 
C)  Each employee should be asked to sign a receipt for wages received. 
D)  A separate checking account for payroll should be maintained.

Question 2

Which of the following fraud detection steps could not be performed by CAATs?

Accepted Answer

A)  Look for photocopies in invoice files. 
B)  Look for vendor invoices in numerical order. 
C)  Look for vendor invoices slightly below the approval threshold. 
D)  Look for duplicate vendor numbers. 
A)  Look for photocopies in invoice files. 
B)  Look for vendor invoices in numerical order. 
C)  Look for vendor invoices slightly below the approval threshold. 
D)  Look for duplicate vendor numbers.

Question 3

What evidence is appropriate to determine whether recorded purchase transactions are valid and the vendors charged the correct prices?

Accepted Answer

A)  Purchase requisitions and accounts payable entries. 
B)  Receiving reports and purchase orders. 
C)  Purchase requisitions and purchases orders. 
D)  Purchase orders and bid quotes. 
A)  Purchase requisitions and accounts payable entries. 
B)  Receiving reports and purchase orders. 
C)  Purchase requisitions and purchases orders. 
D)  Purchase orders and bid quotes.

Question 4

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 5

The __________________________________ has transaction initiation authority to add new employees and delete terminated employees.

Accepted Answer

personnel

Question 6

To provide assurance that each voucher is submitted and paid only once,an auditor most likely would examine a sample of paid vouchers and determine whether each voucher is

Accepted Answer

A)  Supported by a vendor's invoice. 
B)  Stamped "paid" by the check signer. 
C)  Prenumbered and accounted for. 
D)  Approved for authorized purchases. 
A)  Supported by a vendor's invoice. 
B)  Stamped "paid" by the check signer. 
C)  Prenumbered and accounted for. 
D)  Approved for authorized purchases.

Question 7

The emphasis is on the existence assertion because financial statement users tend to be more concerned about understated expenses and liabilities than overstated.

Accepted Answer

A) True 
 B)False

Question 8

In determining the effectiveness of an entity's policies and procedures relating to the occurrence assertion for payroll transactions,auditors most likely would inquire about and

Accepted Answer

A)  Observe the separation of duties concerning personnel responsibilities and payroll disbursement. 
B)  Inspect evidence of accounting for prenumbered payroll checks. 
C)  Recompute the payroll deductions for employee fringe benefits. 
D)  Verify the preparation of the monthly payroll account bank reconciliation. 
A)  Observe the separation of duties concerning personnel responsibilities and payroll disbursement. 
B)  Inspect evidence of accounting for prenumbered payroll checks. 
C)  Recompute the payroll deductions for employee fringe benefits. 
D)  Verify the preparation of the monthly payroll account bank reconciliation.

Question 9

The internal control questionnaire for receipt of purchases completeness objective would not include which of the following questions?

Accepted Answer

A)  Are the purchase order forms prenumbered and the numerical sequence checked for missing documents? 
B)  Are receiving report forms prenumbered and the numerical sequence checked for missing documents? 
C)  Are competitive bids received and reviewed for certain items? 
D)  Is the accounts payable department notified of goods returned to vendors? 
A)  Are the purchase order forms prenumbered and the numerical sequence checked for missing documents? 
B)  Are receiving report forms prenumbered and the numerical sequence checked for missing documents? 
C)  Are competitive bids received and reviewed for certain items? 
D)  Is the accounts payable department notified of goods returned to vendors?

Question 10

When confirming accounts payable,emphasis should be put on what kind of accounts?

Accepted Answer

A)  Accounts with small or zero balances. 
B)  All accounts should be equally emphasized. 
C)  Accounts with large balances. 
D)  Accounts listed in the accounts payable subsidiary. 
A)  Accounts with small or zero balances. 
B)  All accounts should be equally emphasized. 
C)  Accounts with large balances. 
D)  Accounts listed in the accounts payable subsidiary.

Question 11

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

Question 12

Auditors' "search for unrecorded liabilities" should emphasize the large balances,especially for regular vendors.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following client control activities is not usually performed in the vouchers payable (accounts payable)department?

Accepted Answer

A)  Determining the mathematical accuracy of the vendors' invoices. 
B)  Writing checks for the treasurer's signature to take advantage of purchase discounts. 
C)  Controlling the mailing of the check and remittance advice. 
D)  Checking the prices on the vendor's invoice. 
A)  Determining the mathematical accuracy of the vendors' invoices. 
B)  Writing checks for the treasurer's signature to take advantage of purchase discounts. 
C)  Controlling the mailing of the check and remittance advice. 
D)  Checking the prices on the vendor's invoice.

Question 14

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 15

Proper separation of duties involves authorization of purchases by persons who do not have custody,recording,or reconciliation duties.

Accepted Answer

A) True 
 B)False

Question 16

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 17

The test of controls for purchases,cash disbursements,and accounts payable include the following audit procedures.Next to each of the procedures,indicate the related transaction assertion.

Accepted Answer

g
1.completeness; 2.occurrence

Question 18

Purchases are ordered by a purchasing department that seeks the best prices and quality.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not a major control risk in the payroll cycle?

Accepted Answer

A)  Paying fictitious "employees." 
B)  Overpaying for time or production. 
C)  Losing employees to competitors. 
D)  Incorrect accounting for costs or expenses. 
A)  Paying fictitious "employees." 
B)  Overpaying for time or production. 
C)  Losing employees to competitors. 
D)  Incorrect accounting for costs or expenses.

Question 20

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.

Effective control over the cash payroll function would mandate which of the following?

Which of the following fraud detection steps could not be performed by CAATs?

What evidence is appropriate to determine whether recorded purchase transactions are valid and the vendors charged the correct prices?

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

The __________________________________ has transaction initiation authority to add new employees and delete terminated employees.

To provide assurance that each voucher is submitted and paid only once,an auditor most likely would examine a sample of paid vouchers and determine whether each voucher is

The emphasis is on the existence assertion because financial statement users tend to be more concerned about understated expenses and liabilities than overstated.

In determining the effectiveness of an entity's policies and procedures relating to the occurrence assertion for payroll transactions,auditors most likely would inquire about and

The internal control questionnaire for receipt of purchases completeness objective would not include which of the following questions?

When confirming accounts payable,emphasis should be put on what kind of accounts?

Auditors' "search for unrecorded liabilities" should emphasize the large balances,especially for regular vendors.

Which of the following client control activities is not usually performed in the vouchers payable (accounts payable)department?

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

Proper separation of duties involves authorization of purchases by persons who do not have custody,recording,or reconciliation duties.

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

The test of controls for purchases,cash disbursements,and accounts payable include the following audit procedures.Next to each of the procedures,indicate the related transaction assertion.

Purchases are ordered by a purchasing department that seeks the best prices and quality.

Which of the following is not a major control risk in the payroll cycle?

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

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 Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

Exam 8: Acquisition and Expenditure Cycle

Effective control over the cash payroll function would mandate which of the following?

Which of the following fraud detection steps could not be performed by CAATs?

What evidence is appropriate to determine whether recorded purchase transactions are valid and the vendors charged the correct prices?

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

The __________________________________ has transaction initiation authority to add new employees and delete terminated employees.

To provide assurance that each voucher is submitted and paid only once,an auditor most likely would examine a sample of paid vouchers and determine whether each voucher is

The emphasis is on the existence assertion because financial statement users tend to be more concerned about understated expenses and liabilities than overstated.

In determining the effectiveness of an entity's policies and procedures relating to the occurrence assertion for payroll transactions,auditors most likely would inquire about and

The internal control questionnaire for receipt of purchases completeness objective would not include which of the following questions?

When confirming accounts payable,emphasis should be put on what kind of accounts?

Auditors' "search for unrecorded liabilities" should emphasize the large balances,especially for regular vendors.

Which of the following client control activities is not usually performed in the vouchers payable (accounts payable)department?

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

Proper separation of duties involves authorization of purchases by persons who do not have custody,recording,or reconciliation duties.

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

The test of controls for purchases,cash disbursements,and accounts payable include the following audit procedures.Next to each of the procedures,indicate the related transaction assertion.

Purchases are ordered by a purchasing department that seeks the best prices and quality.

Which of the following is not a major control risk in the payroll cycle?

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

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 Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters