Assurance ACA Exam Questions With Verified Answers

Assurance ACA Exam Questions With Verified Answers Written confirmations are required from all client staff who have made oral representations. True or False? - answerA) True B) False Which one of the following controls is LEAST LIKELY to address the risk that money received is not banked? - answerA) Matching cash receipts with invoices B) Monthly bank reconciliations C) Prompt bank payments D) Investigation of shortages and surpluses of cash in the business As part of his analytical procedures on the financial statements of Nails Ltd, Peter has identified that the current ratio has decreased from 1.7 to 1.3. All purchases of inventory are currently made for cash and all sales are credit sales. Which TWO of the following could be a valid explanation for this decrease? - answerA) The company has increased its credit policy to customers from 30 to 50 days. B) The company has shifted its reliance from long-term debit to short-term debit. C) The company has decided to adopt a just in time inventory system (whereby the supplier will deliver direct to its stores, eliminating the need for a distribution centre). D) The company has recently offered special discounts to customers to attract more sales. The following describes processes which form part of the purchases system in operation at Green Ltd. For each process, decide whether it represents a strength or a weakness in the system. - answer1. All orders are placed directly with suppliers by the production department. 2. All supplier invoices are matched against purchase orders and goods received notes prior to being entered into the accounting system. Two types of procedures used in gathering evidence are tests of controls and substantive procedures. For each of the following examples, decide which type of procedure is illustrated. - answer1. Carrying out analytical procedures on the income statement 2. Reviewing board minutes for evidence of authorisation of major additions to non-current assets 3. Reperforming only the year-end bank reconciliation For each of the following statements concerning analytical procedures, decide whether they are true or false. - answer1. Analytical procedures can be used in tests of controls 2. Analytical procedures are only helpful where the integrity of the underlying data is high 3. Analytical procedures must be carried out by senior audit personnel only In respect of an assurance engagement which of the following is the LEAST persuasive method of gathering evidence? - answerA) Re performance of a depreciation calculation B) Inspection of a supplier's invoice C) Inspection of an internally-generated order for the purchase of a non-current asset