ACC 413/513 Exam #2 Review

ACC 413/513 Exam #2 Review

By Jennifer Kern

Multiple Select

Was Will Smith's slap spontaneous?

• Spontaneous

• Premeditated

• No idea what you're talking about

Multiple Choice

___ is the use of fraudulent means to take money or other property from an employer.

• A direct-effect illegal act

• Embezzlement

• Employee Fraud

• Management Fraud

Multiple Choice

An Employee tells themselves “I need to maintain a lifestyle and image’ as they create a fictitious vendor in the system to begin fraudulent activity. This example demonstrates which of the following components of the Fraud Triangle?

• Motivation/Pressure

• Rationalization

• Manipulation

• Objectivity

• Pursuit

Multiple Choice

If an employee misappropriates an employer’s money or property that has been entrusted to them, they are committing:

• A direct-effect illegal act

• Embezzlement

• Employee Fraud

• Management Fraud

Multiple Choice

Which of the following assertions is least relevant pertaining to the audit of an organization’s cash balance?

• Existence

• Valuation

• Presentation and Disclosure

• Completeness

Multiple Choice

The deliberate floating of funds between two or more bank accounts to make it appear that more cash is present and available than is really the case is referred to as:

• Check skating

• Check Kiting

• Shooting the Loop

• Shooting the Float

Multiple Choice

When an organization receives and processes customer orders, it is important that the organization:

• Completes a credit check before authorizing transactions paid with cash

• Determines how to keep customer credit card information secure

• Pre-numbers shipping documents, customer orders, and invoices to confirm existence

• All of the above

Multiple Choice

____ are designed to obtain evidence about the company’s performance of its own control activities.

• Analytical Procedures

• Substantive Procedures

• Tests of Controls

• Risk Assessment Procedures

Multiple Choice

Which of the following statements is correct concerning the use of negative confirmation requests?

• Unreturned negative confirmation requests indicate that alternative procedures are necessary.

• Negative confirmation requests are effective when detection risk is low.

• Negative confirmation requests are effective when understatements of account balances are suspected.

• Unreturned negative confirmation requests rarely provide significant explicit evidence.

Multiple Choice

Confirmations of accounts receivable provide the most evidence for which of the following assertions?

• Rights and obligations.

• Existence.

• Completeness.

• Valuation or allocation.

Multiple Choice

If Entity sends retailers/distributors more product than they would typically buy, inflates revenues in the short term but stifles revenues down the road, they are engaging in:

• Cut-Off Manipulation

• Bill and Hold arrangements

• Channel Stuffing

• Returns and Allowance arrangements

Multiple Choice

Lipham Company uses its sales invoices for posting perpetual inventory records. Inadequate internal control over the invoicing function allows goods to be invoiced that do not get shipped. The inadequate controls could cause an

• Understatement of revenues, receivables, and inventory.

• Overstatement of revenues and receivables and an understatement of inventory.

• Overstatement of revenues, receivables, and inventory.

• Understatement of revenues and receivables and an overstatement of inventory.

Multiple Choice

The receiving department that inspects goods for quality and quantity utilizes the related purchase order to prepare the receiving report.

• True

• False

Multiple Choice

The largest risks in the acquisition and expenditure cycle include all the following except:

• Unrecorded Liabilities

• Overstatement of Expenses

• Non-Cancellable Purchase Agreements

• All of the following represent major threats to the Acquisition and Expenditure Cycle.

Multiple Choice

Which of the following fraud signs could be detected by using data and analytic techniques?

• Search for invoices always slightly lower than a review threshold.

• Search for vendors with only post office box addresses.

• Search for vendor's invoices submitted in numerical order.

• All of the choices are correct.

Multiple Choice

To determine whether accounts payable are complete, auditors perform a test to verify that all merchandise received has been recorded. The population for this test consists of all

• Receiving reports.

• Purchase orders.

• Vendors’ invoices.

• Canceled checks.

Multiple Choice

In a test of controls, auditors may trace receiving reports to vouchers recorded in the voucher register. This is a test for

• Completeness.

• Cutoff.

• Occurrence.

• Classification.

Multiple Choice

Cash disbursements are authorized by:

• a complete voucher package.

• receiving reports.

• invoices.

• purchase orders.

Multiple Choice

Which of the following auditing procedures probably would provide the most reliable evidence concerning the entity's assertion of rights and obligations related to inventories?

• Select the last few shipping documents used before the physical count and determine whether the shipments were recorded as sales.

• Inspect the open purchase order file for significant commitments that should be considered for disclosure.

• Trace test counts noted during the entity's physical count to the entity's summarization of quantities.

• Inspect agreements to determine whether any inventory is pledged as collateral or subject to any liens.

Multiple Choice

An auditor most likely would make inquiries of production and sales personnel concerning possible obsolete or slow-moving inventory to support management's financial statement assertion of

• Existence/

  Occurrence

• Allocation or valuation

• Completeness

• Rights and obligations

• Classification

Multiple Choice

The overall production authorization starts with a:

• Bill of materials.

• Sales forecast.

• Purchase order.

• Production plan.

Multiple Choice

Management designs a control to separate items held on consignment with a unique account number. This control support management's financial statement assertion of:

• Existence/

  Occurrence

• Allocation or valuation

• Completeness

• Rights and obligations

• Classification

Multiple Choice

An auditor who wished to test for the existence or occurrence of inventory would most likely select a sample of inventory items from the perpetual records and

• vouch additions to sales invoices.

• trace additions to the general ledger.

• vouch additions to receiving reports.

• trace receipts to receiving reports.