chapter 11,12, 13 practice questions (Quiz 4) Auditing
Questions and Answers
understanding the significance of the purchasing cycle to provides a context for important risk assessments
the entity__ _. 3 multiple choice options
Which of the following is the most effective control to Match purchase order, receiving report, and vendor's invoice for each vendor in
detect vouchers that were prepared for the payment of acocunts payable department
goods that were not received? 3 multiple choice options
A client's materials purchasing cycle begins with Evaluate the reliability of information generated as a result of the purchasing
requisitions form user departments and ends with the process.
receipt of materias and the recognition of a liability. An 3 multiple choice options
auditor's primary objective in reviewing this cycle is to
Propex Corporation uses a voucher register and does not Partial payments to vendors are continuously made in the ordinary course of
record invoices in a subsidiary ledger. Propex will business.
probably benefit most from the additional cost of
3 multiple choice options
maintaining an accounts payable subsidiary ledger if
Jackson, the purchasing agent of Judd Hardware, has a Purchase orders
relative who owns a retail hardware store, Jackson 3 multiple choice options
arranged for hardware to be delivered by manufacturers
to the retail store on a COD basis thereby enabling his
relative to buy at Judd's wholesale prices, Jackson was
probably able to accomplish this because of Judd's poor
internal control over
An entity's internal control requires for every check Canceled checks
request that there be an approved voucher, supported 3 multiple choice options
by a prenumbered purchase order, and a prenumbered
receiving report. To determine whether checks are being
issued for unauthorized expenditures, an auditor most
likely would select for testing from the population of:
, An auditor wishes to perform tests of controls on a Observation and inquiry
client's cash disbursements relating to accounts payable. 3 multiple choice options
If the control procedures leave no audit trail of
documentary evidence, the auditor most likely will test
the procedures by:
A. Confirmation and observation.
B. Observation and inquiry.
C. Analytical procedures and confirmation.
D. Inquiry and analytical procedures.
Which of the following controls should prevent an The check signer reviews and cancels the voucher packets
invoice for the purchase of merchandise form being paid 3 multiple choice options
twice?
Which of the following is the best audit procedure for Examine a sample of cash disbursements in the period subsequent to year-end.
determining the existence of unrecorded liabilities? 3 multiple choice options
A large retail enterprise has established a policy which Detect any fictious employee who may have been placed on the payroll
requires that the paymaster deliver all unclaimed payroll 3 multiple choice options
checks to the interna auditing department at the end of
each payroll distribution day. This policy was most likely
adopted in order to:
Effective internal control over the payroll function would Total time spent on jobs should be compared with total time indicated on time
include which of the following? clock punch cards.
3 multiple choice options
The auditor may observe the distribution of paychecks to employees of record actually exist and are employed by the client.
ascertain whether 3 multiple choice options
in the audit of which of the following types of profit- A manufacturing organization
orientated enterprises would the auditor be mot likely to 3 multiple choice options
place special emphasis on the testing controls over
proper classification of payroll transactions?
An auditor most likely would perform substantive analytical procedures indicate unusual fluctuations in recurring payroll entries.
procedures of details on payroll transactions and 3 multiple choice options
balances when
When control risk is assessed as low for assertions Recalculating payroll accruals.
related to payroll, substantive tests of payroll balances 3 multiple choice options
most likely would be limited to applying analytical
procedures and:
which of the following is a substantive procedure that an vouching selected entries in the a/p subsidiary ledger to purchase orders and
auditor most likely would perform to verify the existence receiving reports
and valuation of recorded a/p? 3 multiple choice options
the purchasing process normally includes all of the purchases on account, purchase returns, and cash disbursements
following transactions: 3 multiple choice options
Questions and Answers
understanding the significance of the purchasing cycle to provides a context for important risk assessments
the entity__ _. 3 multiple choice options
Which of the following is the most effective control to Match purchase order, receiving report, and vendor's invoice for each vendor in
detect vouchers that were prepared for the payment of acocunts payable department
goods that were not received? 3 multiple choice options
A client's materials purchasing cycle begins with Evaluate the reliability of information generated as a result of the purchasing
requisitions form user departments and ends with the process.
receipt of materias and the recognition of a liability. An 3 multiple choice options
auditor's primary objective in reviewing this cycle is to
Propex Corporation uses a voucher register and does not Partial payments to vendors are continuously made in the ordinary course of
record invoices in a subsidiary ledger. Propex will business.
probably benefit most from the additional cost of
3 multiple choice options
maintaining an accounts payable subsidiary ledger if
Jackson, the purchasing agent of Judd Hardware, has a Purchase orders
relative who owns a retail hardware store, Jackson 3 multiple choice options
arranged for hardware to be delivered by manufacturers
to the retail store on a COD basis thereby enabling his
relative to buy at Judd's wholesale prices, Jackson was
probably able to accomplish this because of Judd's poor
internal control over
An entity's internal control requires for every check Canceled checks
request that there be an approved voucher, supported 3 multiple choice options
by a prenumbered purchase order, and a prenumbered
receiving report. To determine whether checks are being
issued for unauthorized expenditures, an auditor most
likely would select for testing from the population of:
, An auditor wishes to perform tests of controls on a Observation and inquiry
client's cash disbursements relating to accounts payable. 3 multiple choice options
If the control procedures leave no audit trail of
documentary evidence, the auditor most likely will test
the procedures by:
A. Confirmation and observation.
B. Observation and inquiry.
C. Analytical procedures and confirmation.
D. Inquiry and analytical procedures.
Which of the following controls should prevent an The check signer reviews and cancels the voucher packets
invoice for the purchase of merchandise form being paid 3 multiple choice options
twice?
Which of the following is the best audit procedure for Examine a sample of cash disbursements in the period subsequent to year-end.
determining the existence of unrecorded liabilities? 3 multiple choice options
A large retail enterprise has established a policy which Detect any fictious employee who may have been placed on the payroll
requires that the paymaster deliver all unclaimed payroll 3 multiple choice options
checks to the interna auditing department at the end of
each payroll distribution day. This policy was most likely
adopted in order to:
Effective internal control over the payroll function would Total time spent on jobs should be compared with total time indicated on time
include which of the following? clock punch cards.
3 multiple choice options
The auditor may observe the distribution of paychecks to employees of record actually exist and are employed by the client.
ascertain whether 3 multiple choice options
in the audit of which of the following types of profit- A manufacturing organization
orientated enterprises would the auditor be mot likely to 3 multiple choice options
place special emphasis on the testing controls over
proper classification of payroll transactions?
An auditor most likely would perform substantive analytical procedures indicate unusual fluctuations in recurring payroll entries.
procedures of details on payroll transactions and 3 multiple choice options
balances when
When control risk is assessed as low for assertions Recalculating payroll accruals.
related to payroll, substantive tests of payroll balances 3 multiple choice options
most likely would be limited to applying analytical
procedures and:
which of the following is a substantive procedure that an vouching selected entries in the a/p subsidiary ledger to purchase orders and
auditor most likely would perform to verify the existence receiving reports
and valuation of recorded a/p? 3 multiple choice options
the purchasing process normally includes all of the purchases on account, purchase returns, and cash disbursements
following transactions: 3 multiple choice options
