Question 1

An auditor most likely would perform substantive procedures on payroll transactions and balances when

Accepted Answer

A) Cutoff tests indicate a substantial amount of accrued payroll expense. 
B) The assessed level of control risk relative to payroll transactions is low. 
C) Analytical procedures indicate unusual fluctuations in recurring payroll entries. 
D) Accrued payroll expense consists primarily of unpaid commissions. 
A) Cutoff tests indicate a substantial amount of accrued payroll expense. 
B) The assessed level of control risk relative to payroll transactions is low. 
C) Analytical procedures indicate unusual fluctuations in recurring payroll entries. 
D) Accrued payroll expense consists primarily of unpaid commissions.

Question 2

Auditors should inspect the "unmatched receiving report" file to determine whether the liability for the receipt of goods has been recorded.

Accepted Answer

A) True 
 B)False

Question 3

After checks are signed for vendor invoices,why should vouchers be marked PAID or otherwise mutilated?

Accepted Answer

To show they have be

Question 4

Vouchers should be stamped PAID to

Accepted Answer

A) Prevent duplicate payment. 
B) Generate a new purchase order. 
C) Indicate posting in the voucher register. 
D) Facilitate preparation of the bank reconciliation. 
A) Prevent duplicate payment. 
B) Generate a new purchase order. 
C) Indicate posting in the voucher register. 
D) Facilitate preparation of the bank reconciliation.

Question 5

The __________________________________ has transaction initiation authority to add new employees and delete terminated employees.
Reference: Question also found in study guide

Accepted Answer

personnel

Question 6

"Recorded vouchers (accounts payable entries)in the voucher register (e.g.,purchases journal)supported by completed voucher documentation" is a specific example of which management assertion?

Accepted Answer

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

Question 7

When goods are received,the receiving clerk should match the goods with the

Accepted Answer

A) Purchase order and the requisition form. 
B) Vendor's invoice and the receiving report. 
C) Vendor's shipping document and the purchase order. 
D) Receiving report and the vendor's shipping document. 
A) Purchase order and the requisition form. 
B) Vendor's invoice and the receiving report. 
C) Vendor's shipping document and the purchase order. 
D) Receiving report and the vendor's shipping document.

Question 8

A furniture company ordered 84 tables from a supplier.The supplier accidentally sent only 48 tables,but the receiving department at the furniture company accepted the tables.The invoice was eventually received but was for the 84 tables ordered.The furniture company paid the entire amount.Which of the following controls would have been least likely to have prevented this erroneous payment?

Accepted Answer

A) The copy of the purchase order sent to the furniture company's receiving department should not have shown an expected quantity. 
B) Personnel in the furniture company's accounts payable department should compare the receiving report to the purchase invoice before creation of the voucher. 
C) Personnel in the furniture company's cash disbursements department should compare the check that is prepared to all of the backup documentation. 
D) Personnel in the furniture company's purchasing department should compare the purchase requisition to the purchase order. 
A) The copy of the purchase order sent to the furniture company's receiving department should not have shown an expected quantity. 
B) Personnel in the furniture company's accounts payable department should compare the receiving report to the purchase invoice before creation of the voucher. 
C) Personnel in the furniture company's cash disbursements department should compare the check that is prepared to all of the backup documentation. 
D) Personnel in the furniture company's purchasing department should compare the purchase requisition to the purchase order.

Question 9

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 10

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 11

Small Corporation uses a Wages Clearing Account for its payroll disbursements.At the end of February,a reasonably large debit balance remained in this account.The most likely reason for this is that

Accepted Answer

A) More labor cost had been assigned to the expense accounts than had been paid. 
B) Some labor cost had not been properly classified in the expense accounts. 
C) Some employees had not yet cashed their checks. 
D) Not enough cash had been transferred to the bank account. 
A) More labor cost had been assigned to the expense accounts than had been paid. 
B) Some labor cost had not been properly classified in the expense accounts. 
C) Some employees had not yet cashed their checks. 
D) Not enough cash had been transferred to the bank account.

Question 12

The sampling unit in a test of controls pertaining to the existence or occurrence of payroll transactions ordinarily is a(an)

Accepted Answer

A) Clock card or time ticket. 
B) Employee Form W-2. 
C) Employee personnel record. 
D) Payroll register (journal)entry. 
A) Clock card or time ticket. 
B) Employee Form W-2. 
C) Employee personnel record. 
D) Payroll register (journal)entry.

Question 13

An audit team would most likely examine the detail support for which of the following charges?

Accepted Answer

A) Payroll expense. 
B) Cost of goods sold. 
C) Supplies expense. 
D) Legal expense. 
A) Payroll expense. 
B) Cost of goods sold. 
C) Supplies expense. 
D) Legal expense.

Question 14

The ____________________________________ is the primary original record for payroll accounting.
Reference: Question also found in study guide

Accepted Answer

The answer of The ____________________________________ is the primary original record...

Question 15

When considering assertions and obtaining evidence about accounts payable,auditors must put emphasis on the _____________________________ assertion.
Reference: Question also found in study guide
AICPA BB: Critical Thinking
AICPA FN: Risk Analysis
Blooms: Apply

Accepted Answer

The answer of When considering assertions and obtaining evidence about...

Question 16

Which of the following accounts would most likely be audited in connection with a related balance sheet account?

Accepted Answer

A) Property Tax Expense. 
B) Payroll Expense. 
C) Research and Development. 
D) Legal Expense. 
A) Property Tax Expense. 
B) Payroll Expense. 
C) Research and Development. 
D) Legal Expense.

Question 17

The usual source for journal entries posted to the general ledger to record the purchase of inventory is

Accepted Answer

A) Sales invoices updated with cost data from the inventory records department. 
B) Purchase invoices updated with cost data from the inventory records department. 
C) Receiving reports updated with cost data from the accounts payable department. 
D) Vouchers payable journal from the accounts payable department. 
A) Sales invoices updated with cost data from the inventory records department. 
B) Purchase invoices updated with cost data from the inventory records department. 
C) Receiving reports updated with cost data from the accounts payable department. 
D) Vouchers payable journal from the accounts payable department.

Question 18

An auditor most likely would extend substantive tests of payroll when

Accepted Answer

A) Payroll is extensively audited by the state government. 
B) Payroll expense is substantially higher than in the prior year. 
C) Overpayments are discovered in performing tests of controls. 
D) Employees complain to management about too much overtime. 
A) Payroll is extensively audited by the state government. 
B) Payroll expense is substantially higher than in the prior year. 
C) Overpayments are discovered in performing tests of controls. 
D) Employees complain to management about too much overtime.

Question 19

Assessment of _____________________________ of __________________________________ is important because it governs the nature,timing,and extent of substantive procedures that will be applied in the audit of account balances in the acquisition cycle.
Reference: Question also found in study guide

Accepted Answer

risk; mate

Question 20

Which of the following situations indicates a potential material weakness in internal control over acquisition and expenditure?

Accepted Answer

A) Purchase orders are not prepared for services acquired directly under authorization of department heads. 
B) The same person authorizes voucher packages and signs checks. 
C) Unacceptable goods are not scheduled on receiving reports. 
D) The same person signs checks and stamps vouchers PAID. 
A) Purchase orders are not prepared for services acquired directly under authorization of department heads. 
B) The same person authorizes voucher packages and signs checks. 
C) Unacceptable goods are not scheduled on receiving reports. 
D) The same person signs checks and stamps vouchers PAID.

An auditor most likely would perform substantive procedures on payroll transactions and balances when

Auditors should inspect the "unmatched receiving report" file to determine whether the liability for the receipt of goods has been recorded.

After checks are signed for vendor invoices,why should vouchers be marked PAID or otherwise mutilated?

Vouchers should be stamped PAID to

The __________________________________ has transaction initiation authority to add new employees and delete terminated employees. Reference: Question also found in study guide

"Recorded vouchers (accounts payable entries)in the voucher register (e.g.,purchases journal)supported by completed voucher documentation" is a specific example of which management assertion?

When goods are received,the receiving clerk should match the goods with the

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

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

Small Corporation uses a Wages Clearing Account for its payroll disbursements.At the end of February,a reasonably large debit balance remained in this account.The most likely reason for this is that

The sampling unit in a test of controls pertaining to the existence or occurrence of payroll transactions ordinarily is a(an)

An audit team would most likely examine the detail support for which of the following charges?

The ____________________________________ is the primary original record for payroll accounting. Reference: Question also found in study guide

When considering assertions and obtaining evidence about accounts payable,auditors must put emphasis on the _____________________________ assertion. Reference: Question also found in study guide AICPA BB: Critical Thinking AICPA FN: Risk Analysis Blooms: Apply

Which of the following accounts would most likely be audited in connection with a related balance sheet account?

The usual source for journal entries posted to the general ledger to record the purchase of inventory is

An auditor most likely would extend substantive tests of payroll when

Assessment of _ of ______ is important because it governs the nature,timing,and extent of substantive procedures that will be applied in the audit of account balances in the acquisition cycle. Reference: Question also found in study guide

Which of the following situations indicates a potential material weakness in internal control over acquisition and expenditure?

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

An auditor most likely would perform substantive procedures on payroll transactions and balances when

Auditors should inspect the "unmatched receiving report" file to determine whether the liability for the receipt of goods has been recorded.

After checks are signed for vendor invoices,why should vouchers be marked PAID or otherwise mutilated?

Vouchers should be stamped PAID to

The __________________________________ has transaction initiation authority to add new employees and delete terminated employees. Reference: Question also found in study guide

"Recorded vouchers (accounts payable entries)in the voucher register (e.g.,purchases journal)supported by completed voucher documentation" is a specific example of which management assertion?

When goods are received,the receiving clerk should match the goods with the

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

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

Small Corporation uses a Wages Clearing Account for its payroll disbursements.At the end of February,a reasonably large debit balance remained in this account.The most likely reason for this is that

The sampling unit in a test of controls pertaining to the existence or occurrence of payroll transactions ordinarily is a(an)

An audit team would most likely examine the detail support for which of the following charges?

The ____________________________________ is the primary original record for payroll accounting. Reference: Question also found in study guide

When considering assertions and obtaining evidence about accounts payable,auditors must put emphasis on the _____________________________ assertion. Reference: Question also found in study guide AICPA BB: Critical Thinking AICPA FN: Risk Analysis Blooms: Apply

Which of the following accounts would most likely be audited in connection with a related balance sheet account?

The usual source for journal entries posted to the general ledger to record the purchase of inventory is

An auditor most likely would extend substantive tests of payroll when

Assessment of _____________________________ of __________________________________ is important because it governs the nature,timing,and extent of substantive procedures that will be applied in the audit of account balances in the acquisition cycle. Reference: Question also found in study guide

Which of the following situations indicates a potential material weakness in internal control over acquisition and expenditure?

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

Assessment of _ of ______ is important because it governs the nature,timing,and extent of substantive procedures that will be applied in the audit of account balances in the acquisition cycle. Reference: Question also found in study guide