Audit CH 8 Connect - Quizlet

When confirming accounts payable, emphasis should be put on what kind of accounts?

a. Accounts with small or zero balances

b. All accounts should be equally emphasized.

c. Accounts with large balances

d. Accounts listed in the accounts payable subsidiary

a

"Recorded vouchers (accounts payable entries) in the voucher register (e.g., purchases journal) supported by completed voucher documentation" is a specific example of which management assertion?

a. Classification

b. Occurrence

c. Completeness

d. Cutoff

b

"All purchase orders are supported by requisitions from proper persons" is a specific example of which management assertion?

a. Occurrence

b. Completeness

c. Cutoff

d. Classification

a

For the copy of the purchase order that goes to the receiving department, it is best to

a. leave off the description of the goods ordered.

b. leave off the quantity of the goods ordered.

c. leave off the name of the vendor.

d. have the receiving department forward all copies of the purchase order to accounts payable.

b

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

a. identify usually large purchases that should be investigated further.

b. verify that cash disbursements were for goods actually received.

c. determine that purchases were properly recorded.

d. test whether payments were for goods actually ordered.

c

Which of the following client control activities is not usually performed in the vouchers payable (accounts payable) department?

a. Determining the mathematical accuracy of the vendors' invoices

b. Writing checks for the treasurer's signature to take advantage of purchase discounts

c. Controlling the mailing of the check and remittance advice

d. Checking the prices on the vendor's invoice

c

Auditors may conclude that depreciation charges are too small by noting

a. insured values much larger than book values.

b. large numbers of fully depreciated assets.

c. frequent trade-ins of relatively new assets.

d. large and frequent losses on assets retired.

d

What evidence is appropriate to determine whether recorded purchase transactions are valid and the vendors charged the correct prices?

a. Purchase requisitions and accounts payable entries

b. Receiving reports and purchase orders

c. Purchase requisitions and purchases orders

d. Purchase orders and bid quotes

b

Which of the following would not be included in the supporting documents for a voucher?

a. Purchase order

b. Vendor invoice

c. Receiving report

d. Blank check

d

When using confirmations to provide evidence about the completeness assertion for accounts payable, the appropriate population most likely would be

a. vendors with whom the entity has previously done business.

b. amounts recorded in the accounts payable subsidiary ledger.

c. payees of checks drawn in the month after the year-end.

d. invoices filed in the entity's open invoice file.

a

An auditor wishes to perform tests of controls on a client's purchasing procedures. If the control activities leave no audit trail of documentary evidence, the auditor most likely will test the procedures by

a. confirmation and observation.

b. observation and inquiry.

c. analytical procedures and confirmation.

d. inquiry and analytical procedures.

b

Which of the following audit procedures is best for identifying unrecorded accounts payable?

a. Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payables apply to the prior period

b. Investigating payables recorded just prior to and just subsequent to the balance sheet date to determine whether they are supported by receiving reports

c. Examining unusual relationships between monthly accounts payable balances and recorded cash payments

d. Reconciling vendors' statements to the file of receiving reports to identify items received just prior to the balance sheet date

a

Which of the following situations represents an internal control weakness in the payroll department?

a. Payroll department personnel are rotated in their duties.

b. Paychecks are distributed by the employees' immediate supervisor.

c. Payroll records are reconciled with quarterly tax reports.

d. The timekeeping function is independent of the payroll department.

b

The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the

a. human resources function from the controllership function.

b. administrative controls from the internal accounting controls.

c. authorization of transactions from the custody of related assets.

d. operational responsibility from the recordkeeping responsibility.

c

An auditor most likely would extend substantive tests of payroll when

a. payroll is extensively audited by the state government.

b. payroll expense is substantially higher than in the prior year.

c. overpayments are discovered in performing tests of controls.

d. employees complain to management about too much overtime.

c

An auditor most likely would perform substantive procedures on payroll transactions and balances when

a. cutoff tests indicate a substantial amount of accrued payroll expense.

b. the assessed level of control risk relative to payroll transactions is low.

c. analytical procedures indicate unusual fluctuations in recurring payroll entries.

d. accrued payroll expense consists primarily of unpaid commissions.

c

Which of the following is the best audit procedure for determining the existence of unrecorded liabilities?

a. Examine confirmation requests returned by creditors whose accounts are on a subsidiary trial balance of accounts payable.

b. Examine a sample of cash disbursements in the period subsequent to year-end.

c. Examine a sample of invoices a few days prior to and subsequent to year-end to ascertain whether they have been properly recorded.

d. Examine unusual relationships between monthly accounts payable and recorded purchases.

b

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

a. vendors' invoices.

b. purchase orders.

c. receiving reports.

d. canceled checks.

c

A furniture company ordered 84 tables from a supplier. The supplier accidentally sent only 48 tables, but the receiving department at the furniture company accepted the tables. The invoice was eventually received but was for the 84 tables ordered. The furniture company paid the entire amount. Which of the following controls would have been least likely to have prevented this erroneous payment?

a. The copy of the purchase order sent to the furniture company's receiving department should not have shown an expected quantity.

b. Personnel in the furniture company's accounts payable department should compare the receiving report to the purchase invoice before creation of the voucher.

c. Personnel in the furniture company's cash disbursements department should compare the check that is prepared to all of the backup documentation.

d. Personnel in the furniture company's purchasing department should compare the purchase requisition to the purchase order.

d

Specific balance assertions typical of accounts payable would not include

a. recorded liabilities are obligations of the entity.

b. estimated liabilities are properly valued.

c. accounts payable are not pledged as collateral.

d. payables are recorded in the proper period.

c

The internal control questionnaire for purchases and accounts payable includes the following questions. Next to each of the questions, indicate the letter of the related transaction assertion.

Are vendors' monthly statements reconciled with individual accounts payable accounts?

accuracy

occurrence

completeness

cutoff

classification

accuracy

The internal control questionnaire for purchases and accounts payable includes the following questions. Next to each of the questions, indicate the letter of the related transaction assertion.

Are all purchases made only on the basis of approved purchase requisitions?

accuracy

occurrence

completeness

cutoff

classification

occurrence

The internal control questionnaire for purchases and accounts payable includes the following questions. Next to each of the questions, indicate the letter of the related transaction assertion.

Are vendors' invoices listed immediately upon receipt?

accuracy

occurrence

completeness

cutoff

classification

completeness

The internal control questionnaire for purchases and accounts payable includes the following questions. Next to each of the questions, indicate the letter of the related transaction assertion.

Are vendors' invoices matched against purchase orders and receiving reports before a liability is recorded?

accuracy

occurrence

completeness

cutoff

classification

occurrence

The internal control questionnaire for purchases and accounts payable includes the following questions. Next to each of the questions, indicate the letter of the related transaction assertion.

Is the accounts payable customer ledger balanced periodically with the general ledger control account?

accuracy

occurrence

completeness

cutoff

classification

accuracy

The internal control questionnaire for purchases and accounts payable includes the following questions. Next to each of the questions, indicate the letter of the related transaction assertion.

Does the accounting manual give instructions to date purchase entries on the date of receipt of goods?

accuracy

occurrence

completeness

cutoff

classification

cutoff

The internal control questionnaire for purchases and accounts payable includes the following questions. Next to each of the questions, indicate the letter of the related transaction assertion.

Are shipping documents authorized and prepared for goods returned to vendors?

accuracy

occurrence

completeness

cutoff

classification

occurrence

The internal control questionnaire for purchases and accounts payable includes the following questions. Next to each of the questions, indicate the letter of the related transaction assertion.

Is the accounts payable department notified of goods returned to vendors?

accuracy

occurrence

completeness

cutoff

classification

completeness