An auditor compares information on canceled checks with information contained in the cash disbursements journal. The objective of this test is to determine that:

no discrepancies exist between the data on the checks and the data in the journal.

cash disbursements are for goods and services actually received.

proper cash purchase discounts have been recorded.

recorded cash disbursement transactions are properly authorized.

Which of the following procedures would an auditor most likely perform in searching for unrecorded payables?

For cash payments occurring after the balance sheet date, examine the date on the associated receiving report or vendor invoice to determine if it relates to the current audit period.

Vouch a sample of creditor balances to supporting invoices, receiving reports and purchase orders.

Reconcile receiving reports with related cash payments made just prior to year-end.

Contrast the ratio of accounts payable to purchases with the prior year's ratio.

The audit procedures used to verify accrued liabilities differ from those employed for the verification of accounts payable because:

accrued liabilities usually pertain to services of a continuing nature, while accounts payable are the result of completed transactions.

accrued liability balances are less material than accounts payable balances.

evidence supporting accrued liabilities is nonexistent, while evidence supporting accounts payable is readily available.

accrued liabilities at year-end will become accounts payable during the following year.

The auditor is most likely to verify accrued commissions payable in conjunction with the:

review of post balance sheet date disbursements.

examination of trade accounts payable.

Which of the following procedures relating to the examination of accounts payable could the auditor delegate entirely to the entity's employees?

Prepare a schedule/listing of accounts payable.

Test footings in the accounts payable ledger.

Reconcile unpaid invoices to vendors' statements.

Mail confirmations for selected account balances.

Which of the following audit procedures is least likely to detect an unrecorded liability?

Analysis and recalculation of depreciation expense.

Analysis and recalculation of interest expense.

Mailing of standard bank confirmation forms.

Reading of the minutes of meetings of the board of directors.

For effective internal control over accuracy of transactions, the accounts payable department should compare the information on each vendor's invoice with the:

receiving report and the purchase order.

receiving report and the voucher.

vendor's packing slip and the purchase order.

vendor's packing slip and the voucher.

In testing controls over cash disbursements, an auditor most likely would determine that the person who signs the checks also:

is responsible for mailing the checks.

reviews the monthly bank reconciliation.

returns the checks to accounts payable.

is denied access to the supporting documents.

With respect to a small company's system of purchasing supplies, an auditor's primary concern should be to obtain satisfaction that supplies ordered and paid for have been:

received, counted, and checked to quantities and amounts on purchase orders and invoices.

requested and approved by authorized individuals who have no incompatible duties.

properly recorded as assets and systematically amortized over the estimated useful life of the supplies.

used in the course of business and solely for business purposes during the year under audit.

As an in-charge auditor, you are reviewing a summary of control weaknesses in cash disbursement procedures. Which one of the following weaknesses, standing alone, should cause you the least concern?

Checks are signed by only one person.

Signed checks are distributed by the controller to approved payees.

Treasurer fails to establish validity of names and addresses of check payees.

Cash disbursements are made directly out of cash receipts.

Tests of controls for the occurrence assertion for purchases include all of the following except:

tracing a sample of vouchers to purchases journal.

evaluating proper segregation of duties.

testing a sample of vouchers for an authorized purchase order.

testing a sample of vouchers for matching receiving reports.

An internal control questionnaire indicates that an approved receiving report is required to accompany every check request for payment of merchandise. Which of the following procedures provides the greatest assurance that this control is operating effectively?

Select and examine canceled checks and ascertain that the related receiving reports are dated no later than the checks.

Select and examine receiving reports and ascertain that the related canceled checks are dated no earlier than the receiving reports.

Select and examine receiving reports and ascertain that the related canceled checks are dated no later than the receiving reports.

Select and examine canceled checks and ascertain that the related receiving reports are dated no earlier than the checks.

An auditor wishes to perform tests of controls on an entity's cash disbursements procedures. If the control activities leave no audit trail of documentary evidence, the auditor most likely will test the procedures by:

inquiry and analytical procedures.

analytical procedures and confirmation.

To provide assurance that each voucher is submitted and paid only once, an auditor most likely would examine a sample of paid vouchers and determine whether each voucher is:

stamped "paid" by the check signer.

supported by a vendor's invoice.

approved for authorized purchases.

Which of the following is the most effective control activity to detect vouchers prepared for the payment of goods that were not received?

Matching of purchase order, receiving report, and vendor invoice for each voucher in the accounts payable department.

Counting of goods upon receipt in the storeroom.

Comparison of goods received with goods requisitioned in the receiving department.

Verification of vouchers for accuracy and approval in the internal audit department.

When an auditor selects a sample of items from the vouchers payable register for the last month of the period under audit and traces these items to underlying documents, the auditor is gathering evidence primarily in support of the assertion that:

recorded obligations were valid.

recorded obligations were paid.

incurred obligations were recorded in the correct period.

cash disbursements were recorded as incurred obligations.

An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and the cash disbursements journal. The purpose of this substantive procedure most likely was to:

determine that purchases were properly recorded.

identify unusually large purchases that should be investigated further.

verify that cash disbursements were for goods actually received.

test whether payments were for goods actually ordered.

Substantive procedures to examine the occurrence assertion for accounts payable include:

selecting a sample of vouchers and agreeing them to authorized purchase orders.

selecting a sample of vouchers and tracing them to the purchases journal.

comparing dates on vouchers to dates in the purchases journal.

recomputing the mathematical accuracy of a sample of vendor invoices.

Substantive procedures to examine the completeness assertion for accounts payable include:

selecting a sample of vouchers and tracing them to the purchases journal.

selecting a sample of vouchers and agreeing them to authorized purchase orders.

comparing dates on vouchers to dates in the purchases journal.

recomputing the mathematical accuracy of a sample of vendor invoices.

Substantive procedures to examine the cutoff assertion for accounts payable include:

selecting a sample of receiving reports around year-end and comparing dates on related vouchers to dates in the purchases journal.

selecting a sample of vouchers and agreeing them to authorized purchase orders.

selecting a sample of vouchers and agreeing them to the purchases journal.

recomputing the mathematical accuracy of a sample of vendor invoices.

Purchase cutoff procedures should be designed to test whether or not all inventory:

purchased and received before the year-end was recorded before year-end.

on the year-end balance sheet was carried at lower of cost or market.

on the year-end balance sheet was paid for by the company.

owned by the company is in the possession of the company.

When searching for unrecorded liabilities at year-end, the population identified for sampling would be:

cash disbursements recorded in the period subsequent to year-end.

cash receipts from related parties recorded before year-end.

creditors whose accounts appear on a subsidiary trial balance of accounts payable.

invoices dated a few days before and after year-end.

Which of the following is a substantive procedure that an auditor most likely would perform to verify the existence of recorded accounts payable?

Vouching selected entries in the accounts payable subsidiary ledger to purchase orders and receiving reports.

Investigating the open purchase order file to ascertain that prenumbered purchase orders are used and accounted for.

Receiving the entity's mail, unopened, for a reasonable period of time after the year-end to search for unrecorded vendor's invoices.

Confirming accounts payable balances with known suppliers who have zero balances.

Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities?

Vouch a sample of cash disbursements recorded just after year-end to receiving reports and vendor invoices.

Trace a sample of accounts payable entries recorded just before year-end to the unmatched receiving report file.

Compare a sample of purchase orders issued just after year-end with the year-end accounts payable trial balance.

Scan the cash disbursements entries recorded just before year-end for indications of unusual transactions.

Which of the following procedures would an auditor least likely perform before the balance sheet date?

Observation of merchandise inventory count.

Identification of related parties.

An examination of the balance in the accounts payable account is ordinarily not designed to:

verify that accounts payable were properly authorized.

determine that the amounts represent obligations of the company.

ascertain the reasonableness of recorded liabilities.

determine that all existing liabilities at the balance sheet date have been recorded.

Accounts payable confirmations are used to test:

both the existence and completeness audit assertions.

only the existence audit assertion.

only the completeness audit assertion.

either existence or completeness, depending upon the response rate.

If completeness is a concern for accounts payable, auditors will send accounts payable confirmations to:

primarily vendors with small or zero accounts payable balances.

primarily vendors with large accounts payable balances.

a random sample of all vendors.

Which of the following is an internal control that would prevent a paid disbursement voucher from being presented for payment a second time?

The official signing the check should compare the check with the voucher and should cancel the voucher documents by marking them paid.

Vouchers should be prepared by individuals who are responsible for signing disbursement checks.

Disbursement vouchers should be approved by at least two responsible management officials.

The date on a disbursement voucher should be within a few days of the date the voucher is presented for payment.

The mailing of disbursement checks and remittance advices should be controlled by the employee who:

approved the vouchers for payment.

matched the receiving reports, purchase orders and vendors' invoices.

verified the mathematical accuracy of the vouchers and remittance advices.

Which of the following test(s) of details of transactions can be used as a dual-purpose test in conjunction with tests of controls?

Test a sample of purchase requisitions for proper authorization.

Obtain selected vendors' statements and reconcile to vendor accounts.

Obtain listing of accounts payable and compare total to general ledger.

Review results of confirmations of selected accounts payable.

Which of the following questions would most likely be included in an internal control questionnaire concerning the completeness assertion for purchases?

Are purchase orders, receiving reports, and vouchers prenumbered and periodically accounted for?

Is an authorized purchase order required before the receiving department can accept a shipment or the vouchers payable department can record a voucher?

Are purchase requisitions prenumbered and independently matched with vendor invoices?

Is the unpaid voucher file periodically reconciled with inventory records by an employee who does not have access to purchase requisitions?

Which of the following procedures is least likely to be performed as a part of obtaining an understanding during an audit engagement of a new audit client previously audited by another CPA?

Obtaining confirmation of cash balances.

Communication with the predecessor auditor.

Performing analytical procedures.

A 11

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In assessing control risk for purchases, an auditor vouches a sample of entries in the voucher register to the supporting documents. Which assertion would this test of controls most likely support?

Occurrence

Completeness

Accuracy

Classification

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The existence assertion for accounts payable includes:

determining whether all accounts payable actually are liabilities.

determining whether all accounts payable are recorded in the proper period.

determining whether all accounts payable are properly classified in the financial statements.

determining whether all accounts payable are recorded.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The cutoff assertion for accounts payable includes:

determining whether all accounts payable are recorded.

determining whether all accounts payable actually are liabilities.

determining whether all accounts payable are recorded in the proper period.

determining whether all accounts payable are properly classified in the financial statements.

determining whether all accounts payable are

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population of documents for this test consists of all:

payment vouchers.

receiving reports.

purchase requisitions.

vendors' invoices.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

An important primary purpose of the auditor's review of the entity's procurement system should be to determine the effectiveness of the activities to protect against:

unauthorized persons issuing purchase orders.

improper materials handling.

mispostings of purchase returns.

excessive shrinkage or spoilage.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

An entity erroneously recorded a large purchase twice. Which of the following internal controls would be most likely to detect this error in a timely and efficient manner?

Footing the purchases journal.

Tracing totals from the purchases journal to the ledger accounts.

Reconciling vendors' monthly statements with subsidiary payable ledger accounts.

Sending written quarterly confirmations to all vendors.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

An auditor performs a test to determine whether all merchandise was received for which the entity was billed. The population for this test consists of all:

merchandise received.

vendors' invoices.

canceled checks.

receiving reports

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45 questions

In assessing control risk for purchases, an auditor vouches a sample of entries in the voucher register to the supporting documents. Which assertion would this test of controls most likely support?

The existence assertion for accounts payable includes:

The cutoff assertion for accounts payable includes:

To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population of documents for this test consists of all:

An important primary purpose of the auditor's review of the entity's procurement system should be to determine the effectiveness of the activities to protect against:

An entity erroneously recorded a large purchase twice. Which of the following internal controls would be most likely to detect this error in a timely and efficient manner?

An auditor performs a test to determine whether all merchandise was received for which the entity was billed. The population for this test consists of all:

An auditor compares information on canceled checks with information contained in the cash disbursements journal. The objective of this test is to determine that:

Which of the following procedures would an auditor most likely perform in searching for unrecorded payables?

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 of:

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