1|Page
Gleim’s CPA Test Prep Auditing Complete 100 Questions And
Correct Detailed Answers (Verified Answers) |Already Graded
A+ ||Just Out!!!
Your objective is to determine that nonrecurring purchases,
initiated by various user organizations, have been properly
authorized. If all purchases are made through the purchasing
department, to which of the following documents should you
vouch purchases?
A. Purchase requisitions.
B. Purchase orders.
C. Invoices.
D. Receiving reports. - ANSWER-A
Effective controls relevant to purchasing of raw materials should
usually include all of the following except
A. Obtaining third-party written quality and quantity reports
prior to payment for the raw materials.
B. Obtaining financial approval prior to making a commitment.
C. Systematic reporting of product changes that will affect raw
materials.
D. Determining the need for the raw materials prior to
preparing the purchase order. - ANSWER-A
,2|Page
Based on observations made during an audit, the auditor
should discuss with management the effectiveness of the
company's controls that protect against the purchase of
A. Inventory items acquired based on an economic order
quantity (EOQ) inventory management concept.
B. Supplies individually ordered, without considering possible
volume discounts.
C. Required supplies provided by a vendor who offers no trade
or cash discounts.
D. New equipment that is needed but does not qualify for an
accelerated write-off under the class life rules. - ANSWER-B
Which of the following observations made during the
preliminary survey of a local department store's disbursement
cycle reflects a control strength?
A. Individual department managers use prenumbered forms to
order merchandise from vendors.
B. The receiving department is given a copy of the purchase
order complete with a description of goods, quantity ordered,
and extended price for all merchandise ordered.
C. Individual department managers are responsible for the
movement of merchandise from the receiving dock to storage
or sales areas as appropriate.
,3|Page
D. The CFO's office prepares checks for suppliers based on
vouchers prepared by the accounts payable department. -
ANSWER-D
An internal control narrative indicates that an approved
voucher is required to support every check request for payment
of merchandise. Which of the following procedures provides
the greatest assurance that this control is operating effectively?
A. Select and examine vouchers and ascertain that the related
canceled checks are dated no earlier than the vouchers.
B. Select and examine canceled checks and ascertain that the
related vouchers are dated no later than the checks.
C. Select and examine canceled checks and ascertain that the
related vouchers are dated no earlier than the checks.
D. Select and examine vouchers and ascertain that the related
canceled checks are dated no later than the vouchers. -
ANSWER-B
During the audit of a construction contract, it was discovered
that the contractor was being paid for each ton of dirt removed.
The contract called for payment based on cubic yards removed.
Which internal control might have prevented this error?
A. Comparison of invoices with receiving reports.
B. Extension checks of invoice amounts.
, 4|Page
C. Comparison of actual costs with budgeted costs.
D. Comparison of invoices with purchase orders or contracts. -
ANSWER-D
Which of the following questions should not appear in an
internal control questionnaire relating to cash disbursements?
A. Are imprinted and prenumbered checks used and is a check
protection device used in printing the check amount?
B. Is each check supported by an approved voucher?
C. Are prelistings made of all cash receipts?
D. Are all disbursements except for petty cash made by check? -
ANSWER-C
Propex Corporation uses a voucher register and does not record
invoices in a subsidiary ledger. Propex will probably benefit
most from the additional cost of maintaining an accounts
payable subsidiary ledger if
A. Vendors' requests for confirmation of receivables often go
unanswered for several months until paid invoices can be
reviewed.
B. There are usually invoices in an unmatched invoice file.
C. It is difficult to reconcile vendors' monthly statements.
Gleim’s CPA Test Prep Auditing Complete 100 Questions And
Correct Detailed Answers (Verified Answers) |Already Graded
A+ ||Just Out!!!
Your objective is to determine that nonrecurring purchases,
initiated by various user organizations, have been properly
authorized. If all purchases are made through the purchasing
department, to which of the following documents should you
vouch purchases?
A. Purchase requisitions.
B. Purchase orders.
C. Invoices.
D. Receiving reports. - ANSWER-A
Effective controls relevant to purchasing of raw materials should
usually include all of the following except
A. Obtaining third-party written quality and quantity reports
prior to payment for the raw materials.
B. Obtaining financial approval prior to making a commitment.
C. Systematic reporting of product changes that will affect raw
materials.
D. Determining the need for the raw materials prior to
preparing the purchase order. - ANSWER-A
,2|Page
Based on observations made during an audit, the auditor
should discuss with management the effectiveness of the
company's controls that protect against the purchase of
A. Inventory items acquired based on an economic order
quantity (EOQ) inventory management concept.
B. Supplies individually ordered, without considering possible
volume discounts.
C. Required supplies provided by a vendor who offers no trade
or cash discounts.
D. New equipment that is needed but does not qualify for an
accelerated write-off under the class life rules. - ANSWER-B
Which of the following observations made during the
preliminary survey of a local department store's disbursement
cycle reflects a control strength?
A. Individual department managers use prenumbered forms to
order merchandise from vendors.
B. The receiving department is given a copy of the purchase
order complete with a description of goods, quantity ordered,
and extended price for all merchandise ordered.
C. Individual department managers are responsible for the
movement of merchandise from the receiving dock to storage
or sales areas as appropriate.
,3|Page
D. The CFO's office prepares checks for suppliers based on
vouchers prepared by the accounts payable department. -
ANSWER-D
An internal control narrative indicates that an approved
voucher is required to support every check request for payment
of merchandise. Which of the following procedures provides
the greatest assurance that this control is operating effectively?
A. Select and examine vouchers and ascertain that the related
canceled checks are dated no earlier than the vouchers.
B. Select and examine canceled checks and ascertain that the
related vouchers are dated no later than the checks.
C. Select and examine canceled checks and ascertain that the
related vouchers are dated no earlier than the checks.
D. Select and examine vouchers and ascertain that the related
canceled checks are dated no later than the vouchers. -
ANSWER-B
During the audit of a construction contract, it was discovered
that the contractor was being paid for each ton of dirt removed.
The contract called for payment based on cubic yards removed.
Which internal control might have prevented this error?
A. Comparison of invoices with receiving reports.
B. Extension checks of invoice amounts.
, 4|Page
C. Comparison of actual costs with budgeted costs.
D. Comparison of invoices with purchase orders or contracts. -
ANSWER-D
Which of the following questions should not appear in an
internal control questionnaire relating to cash disbursements?
A. Are imprinted and prenumbered checks used and is a check
protection device used in printing the check amount?
B. Is each check supported by an approved voucher?
C. Are prelistings made of all cash receipts?
D. Are all disbursements except for petty cash made by check? -
ANSWER-C
Propex Corporation uses a voucher register and does not record
invoices in a subsidiary ledger. Propex will probably benefit
most from the additional cost of maintaining an accounts
payable subsidiary ledger if
A. Vendors' requests for confirmation of receivables often go
unanswered for several months until paid invoices can be
reviewed.
B. There are usually invoices in an unmatched invoice file.
C. It is difficult to reconcile vendors' monthly statements.
