Audit of Cycle: Acquisition and Payment; Payroll and Personnel; Inventory and Warehousing; Sales and Collection Flashcards
The overall objective in the audit of the acquisition and payment cycle is:
*to ensure the reliability of the affected accounts.
*to ensure the accuracy of the affected accounts.
*to evaluate whether the affected accounts are fairly stated in accordance with accounting standards.
*to evaluate whether fraudulent payments were made.
*to evaluate whether the affected accounts are fairly stated in accordance with accounting standards.
During your audit of Williams Company you are trying to determine whether all accounts payable were recorded in the proper period. Which assertion are you gathering evidence for?
*Occurrence
*Completeness
*Cutoff
*Rights and Obligations
Cutoff
What typically initiates the acquisitions and payment cycle?
*issuance of a purchase requisition or request for purchase of goods/services
*issuance of payment to vendor
*approval of a new vendor
*purchase requisition
issuance of a purchase requisition or request for purchase of goods/services; or
purchase requisition
What typically ends the acquisitions and payment cycle?
*issuance of a purchase requisition or request for purchase of goods/services
*issuance of a payment to a vendor
*approval of a new vendor
*purchase requisition
issuance of a payment to a vendor
Which of the following accounts is not included in the acquisitions class of transactions?
*Inventory
*Prepaid expenses
*Purchase discounts
*Accounts payable
Purchase discounts
A document indicating a reduction in the amount owed to a vendor because of returned goods is:
*a debit memo.
*a credit memo.
*a receiving report.
*a contractual adjustment form.
a debit memo.
A document used by organizations to establish a formal means of recording and controlling acquisitions which usually contains a package of documents about the acquisition is the:
*voucher.
*purchase order.
*receiving report.
*purchase requisition
voucher
The computer-generated file which records acquisitions, disbursements and allowances for each vendor is the:
*Accounts payable master file.
*Cash disbursements file.
*Acquisitions transaction file.
*Purchase approval file.
Accounts payable master file.
Which of the following business functions is not considered to be part of the acquisitions class of transactions?
*Processing purchase orders
*Recognizing liabilities
*Receiving goods and services
*Processing cash disbursements
Processing cash disbursements
Smaller privately held companies may not maintain an accounts payable master file by vendor. These companies pay on the basis of:
*vendors’ monthly statements.
*individual vendors’ invoices.
*the accounts payable account in the general ledger.
*dunning le ers.
individual vendors’ invoices.
After a purchase requisition is approved, a ________ must be initiated to purchase the goods or services.
*purchase order
*vendor order
*call order
*vendor invoice
purchase order
A document generally received from the vendor which indicates a reduction in the amount owed due to the company granting an allowance is:
*vendor invoice.
*debit memo.
*credit adjustment form.
*credit memo.
debit memo.
Absent disputed amounts and minor timing differences, the vendor’s statements should reconcile to the:
*acquisition journal.
*accounts payable master file.
*cash disbursements amount for purchases.
*vouchers payable amount for vendors.
accounts payable master file.
You have been assigned to the accounts payable transaction cycle as part of your auditing responsibilities. You have decided to vouch a sample of entries in the accounts payable master file to supporting documents. Which assertion is this test of controls most likely to support?
*Accuracy
*Classification
*Completeness
*Occurrence
Occurrence
An auditor is gathering evidence on the completeness assertion. To do so she performs a test to verify that all goods received by the company have been recorded properly. The document population for this test would consist of all:
*Vendor Invoices
*Purchase Orders
*Receiving Reports
*Cash Disbursements for Accounts Payables
Receiving Reports
The accounts payable accounting clerk erroneously recorded the same purchase twice. Which of the following internal control tests would most likely act as a detective control?
*recalculating the purchases journal
*tracing from the purchases journal to the general ledger
*vouching from the general ledger to the purchases journal
*reconciling the vendor’s statements to the accounts payable subsidiary ledger
reconciling the vendor’s statements to the accounts payable subsidiary ledger
An auditor has been assigned to perform tests of controls for a client’s cash disbursement system. Client files are kept electronically with no paper audit trail. In this case the auditor would need to rely on which of the following audit procedures?
*Analytical procedures and Inquiry
*Confirmations and Inquiry
*Observation and Inquiry
*Reperformance and Inquiry
Observation and Inquiry
A wri tten purchase order is a contractual document that is:
*an offer to buy.
*not enforceable if it is not in writing.
*a binding agreement between purchaser and vendor.
*an acceptance of a vendor’s catalog offer to sell.
an offer to buy
Which one of the following duties should not be assigned the purchases department?
*finding the lowest cost vendor
*reviewing vendors’ catalog descriptions and prices for standardized items
*designing the purchase order form
*authorizing the acquisition of goods
authorizing the acquisition of goods
The accounts payable department usually has responsibility for approving acquisitions for payment by comparing the details on the:
*vendor’s invoice and the receiving report.
*vendor’s invoice and the purchase requisition.
*purchase order, receiving report, and vendor’s invoice.
*purchase requisition, purchase order, and receiving report.
purchase order, receiving report, and vendor’s invoice.
A substantive test for accounts payable that would be used to provide evidence regarding the occurrence assertion would be to:
*agree a sample of vouchers to authorized purchase orders.
*recalculate the accuracy of the vouchers and the authorized purchase orders.
*trace vouchers to the client’s purchases journal.
*vouch a sample of vouchers from the cash disbursements register to accounts payable.
trace vouchers to the client’s purchases journal.
A company’s internal control procedures over the acquisition cycle should prevent the preparation of a voucher for goods that have not yet been received. Which of the following is the best procedure to assure vouchers are not prepared for goods not received?
*purchase order and vendor invoice are matched to the receiving report
*compare goods received with goods ordered
*perform sample test counts of items when received
*compare the requisition for goods with the purchase order
purchase order and vendor invoice are matched to the receiving report
Which of the following is not a key control in the acquisition and payment cycle?
*Authorization of purchases
*Authorization of credit
*Timely recording and independent review of transactions
*Authorization of payments
Authorization of credit
Which of the following departments is most likely responsible for pay rate changes and changes in deductible amounts for employees?
*General Accounting
*Human Resources
*Treasury
*Controller
Human Resources