AUDITING II Chapter 11 EXAM QUESTIONS
AND CORRECT ANSWERS
Tests designed to detect purchases made before the end of the year that have been recorded in
the subsequent year most likely would provide assurance about management's assertion
regarding:
a. obligations
b. cutoff
c. accuracy
d. classification - CORRECT ANSWERS b. Cutoff
In auditing accounts payable, an auditor's procedures most likely would focus primarily on
management's assertion of:
a. valuation and allocation
b. completeness
c. existence
d. understandability and classification - CORRECT ANSWERS b. completeness
The authority to accept incoming goods in receiving should be based on a (an):
a. vendor's invoice
b. approved purchase order
c. bill of lading
d. materials requisition - CORRECT ANSWERS b. approved purchase order
Auditor confirmation of accounts payable balances at the balance sheet date may be
unnecessary because:
,a. correspondence with the audit client's attorney will reveal all legal action by vendors for
nonpayment
b. accounts payable balances at the balance sheet date may not be paid before the audit is
completed
c. this is a duplication of cutoff tests
d. there is likely to be other reliable external evidence available to support the balances -
CORRECT ANSWERS d. there is likely to be other reliable external evidence available to
support the balances
Who should be responsible for preparing a purchase order, matching the receiving report and
invoice with the purchase order, and paying for the related purchase?
a. The manager of the department requesting the goods is responsible for preparing the
purchase order, the purchasing department is responsible for matching goods, and the accounts
payable department is responsible for making payment.
b. The purchasing department is responsible fore preparing the purchase order, but the
treasurer is responsible for matching documents and making payment.
c. The purchasing department is responsible for preparing the purchase order, the receiving
department is responsible for matching documents, and the accounts payable department is
responsible for making payment.
d. The purchasing department is responsible for preparing the purchase order, the accounts
payable department is responsible for matching documents, and the treasure - CORRECT
ANSWERS d. The purchasing department is responsible for preparing the purchase order,
the accounts payable department is responsible for matching documents, and the treasurer is
responsible for making payment.
Which of the following control activities is not usually performed in the vouchers payable
department?
a. Controlling the mailing of the check and remittance advice.
b. Having an authorized person approve the voucher.
c. Determining the mathematical accuracy of the vendor's invoice.
, d. Matching the receiving report w/ the purchase order. - CORRECT ANSWERS a.
Controlling the mailing of the check and remittance advice.
In searching for unrecorded liabilities, an auditor most likely would examine the:
a. details of accounts receivable confirmations that are classified as "exceptions".
b. files of purchase requisitions for items ordered just before year end.
c. receiving reports for items received before year-end, but not yet recorded.
d. cutoff bank statement for deposits recorded in the books but not by the bank. - CORRECT
ANSWERS c. receiving reports for items received before year-end, but not yet recorded.
Mailing disbursement checks and remittance advices should be controlled by the employee
who:
a. approves the vouchers for payment
b. matches the receiving reports, purchase orders, and vendor's invoices
c. maintains possession of the mechanical check-signing device
d. signs the check last - CORRECT ANSWERS d. signs the check last
Which of the following internal control activities is not usually performed in the vouchers
payable department?
a. Indicating the asset and expense accounts to be debited.
b. Approving vouchers for payment by having an authorized employee sign the vouchers.
c. Matching the vendor's invoice with the related receiving report.
d. Accounting for unused prenumbered purchase orders and receiving reports - CORRECT
ANSWERS d. Accounting for unused prenumbered purchase orders and receiving reports
In testing controls over cash disbursements, an auditor most likely would determine that the
person who signs checks also:
a. is denied access to the supporting documents.
AND CORRECT ANSWERS
Tests designed to detect purchases made before the end of the year that have been recorded in
the subsequent year most likely would provide assurance about management's assertion
regarding:
a. obligations
b. cutoff
c. accuracy
d. classification - CORRECT ANSWERS b. Cutoff
In auditing accounts payable, an auditor's procedures most likely would focus primarily on
management's assertion of:
a. valuation and allocation
b. completeness
c. existence
d. understandability and classification - CORRECT ANSWERS b. completeness
The authority to accept incoming goods in receiving should be based on a (an):
a. vendor's invoice
b. approved purchase order
c. bill of lading
d. materials requisition - CORRECT ANSWERS b. approved purchase order
Auditor confirmation of accounts payable balances at the balance sheet date may be
unnecessary because:
,a. correspondence with the audit client's attorney will reveal all legal action by vendors for
nonpayment
b. accounts payable balances at the balance sheet date may not be paid before the audit is
completed
c. this is a duplication of cutoff tests
d. there is likely to be other reliable external evidence available to support the balances -
CORRECT ANSWERS d. there is likely to be other reliable external evidence available to
support the balances
Who should be responsible for preparing a purchase order, matching the receiving report and
invoice with the purchase order, and paying for the related purchase?
a. The manager of the department requesting the goods is responsible for preparing the
purchase order, the purchasing department is responsible for matching goods, and the accounts
payable department is responsible for making payment.
b. The purchasing department is responsible fore preparing the purchase order, but the
treasurer is responsible for matching documents and making payment.
c. The purchasing department is responsible for preparing the purchase order, the receiving
department is responsible for matching documents, and the accounts payable department is
responsible for making payment.
d. The purchasing department is responsible for preparing the purchase order, the accounts
payable department is responsible for matching documents, and the treasure - CORRECT
ANSWERS d. The purchasing department is responsible for preparing the purchase order,
the accounts payable department is responsible for matching documents, and the treasurer is
responsible for making payment.
Which of the following control activities is not usually performed in the vouchers payable
department?
a. Controlling the mailing of the check and remittance advice.
b. Having an authorized person approve the voucher.
c. Determining the mathematical accuracy of the vendor's invoice.
, d. Matching the receiving report w/ the purchase order. - CORRECT ANSWERS a.
Controlling the mailing of the check and remittance advice.
In searching for unrecorded liabilities, an auditor most likely would examine the:
a. details of accounts receivable confirmations that are classified as "exceptions".
b. files of purchase requisitions for items ordered just before year end.
c. receiving reports for items received before year-end, but not yet recorded.
d. cutoff bank statement for deposits recorded in the books but not by the bank. - CORRECT
ANSWERS c. receiving reports for items received before year-end, but not yet recorded.
Mailing disbursement checks and remittance advices should be controlled by the employee
who:
a. approves the vouchers for payment
b. matches the receiving reports, purchase orders, and vendor's invoices
c. maintains possession of the mechanical check-signing device
d. signs the check last - CORRECT ANSWERS d. signs the check last
Which of the following internal control activities is not usually performed in the vouchers
payable department?
a. Indicating the asset and expense accounts to be debited.
b. Approving vouchers for payment by having an authorized employee sign the vouchers.
c. Matching the vendor's invoice with the related receiving report.
d. Accounting for unused prenumbered purchase orders and receiving reports - CORRECT
ANSWERS d. Accounting for unused prenumbered purchase orders and receiving reports
In testing controls over cash disbursements, an auditor most likely would determine that the
person who signs checks also:
a. is denied access to the supporting documents.
