ACCT 504 Final Exam Questions Fully Solved Latest Update (2025-2026) Rated A+
Stamped "paid" by the check signer. - Answers To provide assurance that each voucher is submitted and
paid only once, and auditor would examine a sample of paid vouchers and determine whether each
voucher is ...
Vouching selected entries in the AP subsidiary ledger to purchase orders and receiving reports. -
Answers Which substantive procedure that an auditor most likely would perform to verify the existence
assertion about Accounts Payable?
a) Vendors with whom the entity has previously done business. - Answers When using confirmations to
provide evidence about the completeness assertion for AP, the appropriate population most likely is
a) Vendors with whom the entity has previously done business.
b) Amounts recorded in the AP subsidiary ledger.
c) Payees of checks drawn in the month after YE
d) Invoices filed in the entity's open invoice file.
c) Approving a summary of the hours each employee worked during the pay period. - Answers Which of
the following activities performed by a department supervisor most likely would help in the prevention
or detection of payroll fraud?
a) Distributing paychecks directly to department employees.
b) Setting the pay rate for department employees.
c) Approving a summary of the hours each employee worked during the pay period.
d) Hiring employees and authorizing them to be added to the payroll.
b) Analytical procedures indicate unusual fluctuations of unpaid commissions. - Answers An auditor
would most likely perform substantive tests details on payroll transactions and balances when:
a) Cutoff tests indicate a large amount of accrual payroll expense.
b) Analytical procedures indicate unusual fluctuations of unpaid commissions.
c) Assessed risk of material misstatement relative to payroll transactions is low.
d) Accrual payroll expense consists of unpaid commissions.
d) Periodic inventory counts are used to adjust the perpetual inventory records. - Answers Which
internal control activity most likely would be used to maintain accurate inventory records?
a) Perpetual inventory records are periodically compared with the current costs of inventory.
,b) A JIT inventory ordering system keeps inventory levels to a desired minimum.
c) Requisitions, receiving reports, and purchase orders are independently matched.
d) Periodic inventory counts are used to adjust the perpetual inventory records.
b) Accuracy, valuation, and allocation. - Answers An auditor most likely would analyze inventory
turnover rates to obtain evidence concerning relevant assertions about ____.
a) Existence.
b) Accuracy, valuation, and allocation.
c) Rights and obligations.
d) Classification.
b) Accuracy, valuation, and allocation. - Answers Recomputing the unexpired portion of insurance
policies in effect tests which assertion of prepaid insurance?
a) Existence.
b) Accuracy, valuation, and allocation.
c) Rights and obligations.
d) Classification.
d) High - Answers An auditor typically sets inherent risk for intangible assets at a _____ level.
a) Low
b) Moderate
c) Zero
d) High
c) Repairs and maintenance - Answers An analysis of which of the following accounts would best aid in
verifying that all fixed assets have been capitalized?
a) Cash
b) Depreciation expense
c) Repairs and maintenance
d) Property tax expense.
, d) Trustee - Answers During an audit of an issuer of bonds, the auditor should obtain written
confirmations regarding debenture transactions from the
a) Debenture holders.
b) Client's attorney.
c) Internal auditors.
d) Trustee
a) Review the minutes for authorization. - Answers During its fiscal year, a company issued, at a
discount, a substantial amount of first mortgage bonds. In connection with the bond issuance, the
independent auditor should
a) Review the minutes for authorization.
b) Confirm the existence of the bondholders.
c) The number of shares issued and outstanding. - Answers When a client's company does not maintain
its own stock records, the auditor should obtain written confirmation from the transfer agent and
registrar concerning
a) Restrictions on the payment of dividends.
b) Guarantees of preferred stock liquidation value.
c) The number of shares issued and outstanding.
d) The number of shares subject to agreements to repurchase.
b) Minutes of the board of directors. - Answers An auditor should vouch corporate stock issuances and
treasury stock transactions to
a) Numbered stock certificates.
b) Minutes of the board of directors.
c) Articles of incorporation.
d) Transfer agent's records.
a) Purchase orders, receiving reports, and vendors' invoices are independently matched in preparing
vouchers. - Answers Which of the following controls is most effective in providing assurance that
recorded purchases are free of material errors?
a) Purchase orders, receiving reports, and vendors' invoices are independently matched in preparing
vouchers.
Stamped "paid" by the check signer. - Answers To provide assurance that each voucher is submitted and
paid only once, and auditor would examine a sample of paid vouchers and determine whether each
voucher is ...
Vouching selected entries in the AP subsidiary ledger to purchase orders and receiving reports. -
Answers Which substantive procedure that an auditor most likely would perform to verify the existence
assertion about Accounts Payable?
a) Vendors with whom the entity has previously done business. - Answers When using confirmations to
provide evidence about the completeness assertion for AP, the appropriate population most likely is
a) Vendors with whom the entity has previously done business.
b) Amounts recorded in the AP subsidiary ledger.
c) Payees of checks drawn in the month after YE
d) Invoices filed in the entity's open invoice file.
c) Approving a summary of the hours each employee worked during the pay period. - Answers Which of
the following activities performed by a department supervisor most likely would help in the prevention
or detection of payroll fraud?
a) Distributing paychecks directly to department employees.
b) Setting the pay rate for department employees.
c) Approving a summary of the hours each employee worked during the pay period.
d) Hiring employees and authorizing them to be added to the payroll.
b) Analytical procedures indicate unusual fluctuations of unpaid commissions. - Answers An auditor
would most likely perform substantive tests details on payroll transactions and balances when:
a) Cutoff tests indicate a large amount of accrual payroll expense.
b) Analytical procedures indicate unusual fluctuations of unpaid commissions.
c) Assessed risk of material misstatement relative to payroll transactions is low.
d) Accrual payroll expense consists of unpaid commissions.
d) Periodic inventory counts are used to adjust the perpetual inventory records. - Answers Which
internal control activity most likely would be used to maintain accurate inventory records?
a) Perpetual inventory records are periodically compared with the current costs of inventory.
,b) A JIT inventory ordering system keeps inventory levels to a desired minimum.
c) Requisitions, receiving reports, and purchase orders are independently matched.
d) Periodic inventory counts are used to adjust the perpetual inventory records.
b) Accuracy, valuation, and allocation. - Answers An auditor most likely would analyze inventory
turnover rates to obtain evidence concerning relevant assertions about ____.
a) Existence.
b) Accuracy, valuation, and allocation.
c) Rights and obligations.
d) Classification.
b) Accuracy, valuation, and allocation. - Answers Recomputing the unexpired portion of insurance
policies in effect tests which assertion of prepaid insurance?
a) Existence.
b) Accuracy, valuation, and allocation.
c) Rights and obligations.
d) Classification.
d) High - Answers An auditor typically sets inherent risk for intangible assets at a _____ level.
a) Low
b) Moderate
c) Zero
d) High
c) Repairs and maintenance - Answers An analysis of which of the following accounts would best aid in
verifying that all fixed assets have been capitalized?
a) Cash
b) Depreciation expense
c) Repairs and maintenance
d) Property tax expense.
, d) Trustee - Answers During an audit of an issuer of bonds, the auditor should obtain written
confirmations regarding debenture transactions from the
a) Debenture holders.
b) Client's attorney.
c) Internal auditors.
d) Trustee
a) Review the minutes for authorization. - Answers During its fiscal year, a company issued, at a
discount, a substantial amount of first mortgage bonds. In connection with the bond issuance, the
independent auditor should
a) Review the minutes for authorization.
b) Confirm the existence of the bondholders.
c) The number of shares issued and outstanding. - Answers When a client's company does not maintain
its own stock records, the auditor should obtain written confirmation from the transfer agent and
registrar concerning
a) Restrictions on the payment of dividends.
b) Guarantees of preferred stock liquidation value.
c) The number of shares issued and outstanding.
d) The number of shares subject to agreements to repurchase.
b) Minutes of the board of directors. - Answers An auditor should vouch corporate stock issuances and
treasury stock transactions to
a) Numbered stock certificates.
b) Minutes of the board of directors.
c) Articles of incorporation.
d) Transfer agent's records.
a) Purchase orders, receiving reports, and vendors' invoices are independently matched in preparing
vouchers. - Answers Which of the following controls is most effective in providing assurance that
recorded purchases are free of material errors?
a) Purchase orders, receiving reports, and vendors' invoices are independently matched in preparing
vouchers.
