ch 11

Question 1

Which of the following internal control procedures is usually performed in the vouchers payable department?

Answer 1

Which of the following internal control procedures is usually performed in the vouchers payable department?

Question 2

For effective internal control, the accounts payable department generally should

Answer 2

For effective internal control, the accounts payable department generally should

Question 3

When the receiving department returns nonconforming goods to a vendor, the purchasing department should send to the accounting department

Answer 3

A debit memo

Question 4

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

Answer 4

Stemped paid and accompanied by the check signer’s initials

Question 5

The authority to accept incoming goods in receiving should be based on a(n)

Answer 5

Approved purchase order

Question 6

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

Answer 6

Mails the checks to vendors

Question 7

Which of the following internal control questionnaire questions is appropriate for the completeness assertion over purchases?

Answer 7

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

Question 8

Which of the following internal control procedures is performed in the treasurer’s department?

Answer 8

Canceling payment vouchers and marking them “paid”

Question 9

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

Answer 9

Scan cash disbursements just before year-end for indications of unusual transactions

Question 10

An auditor traced a sample of purchase orders and related receiving reports to the purchases and cash disbursements journals. The assertion(s) this procedure verifies is (are)

Answer 10

Completeness

Question 11

Which of the following is a substantive test that an auditor most likely performs to verify existence and accuracy of recorded accounts payable?

Answer 11

Vouching selected entries in these journals to documentation such as purchase orders and receiving reports

Question 12

An auditor suspects that certain client employees are ordering merchandise for themselves over the internet without recording the purchase or receipt of the merchandise. When vendors’ invoices arrive,one of the employees approves them for payment. After invoices are paid, employees destroy the invoice and related vouchers. In gathering evidence regarding this fraud, the auditor most likely will select items for testing from the file of all

Answer 12

Cash disbursements

Question 13

Which of the following assertions should an auditor focus primary attention when auditing accounts payable?

Answer 13

Completeness

Question 14

To determine whether all of a client’s merchandise that they have been billed for has received, the auditor would test from the population of

Answer 14

Vendor invoices

Question 15

Which of the following tests of details most likely would help an auditor determine whether accounts payable have been misstated?

Answer 15

Examine vendor statements for amounts not recorded as purchases

Question 16

In a properly designed accounts payable system, a voucher is prepared after the invoice, purchase order, requisition, and receiving report are verified. The next step in the system is:

Answer 16

entering of the voucher into the voucher register.

Question 17

When goods are received, the receiving clerk should match the goods with:

Answer 17

the approved purchase order.

Question 18

Internal control is strengthened when the quantity of merchandise ordered is omitted from the copy of the purchase order sent to the:

Answer 18

receiving department.

Question 19

Which of the following control activities is not usually performed in the accounts payable department?

Answer 19

accounting for unused prenumbered purchase orders and receiving reports

Question 20

In a properly designed purchasing process, the same employee most likely would match vendors’ invoices with receiving reports and:

Answer 20

recompute the calculations on vendors’ invoices.

Question 21

For effective internal control purposes, which of the following individuals should be responsible for mailing signed checks?

Answer 21

treasurer

Question 22

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:

Answer 22

receiving reports.

Question 23

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

Answer 23

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

Question 24

Purchase cutoff procedures should be designed to test whether all inventory:

Answer 24

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

Question 25

Which of the following procedures is least likely to be performed before the balance sheet date?

Answer 25

search for unrecorded liabilities

Question 26

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

Answer 26

vendors with whom the entity has previously done business.

Question 27

A common step in the testing for accounts payable is to test subsequent disbursements for improper/proper inclusion/exclusion in year end accounts payable.

A common way to test accounts payable is to examine the check register after period end and make selections for testing. Items are selected and then examined for detail. A determination is then made to conclude whether the amount should have been a liability as of year-end and, if so, if it was recorded as such.

Answer 27

1. When searching for unrecorded liabilities, the auditors consider transactions recorded __________ year-end.
2. Accounts payable __________ can be mailed to vendors from whom substantial purchases have been made.
3. To gain overall assurance as to the reasonableness of accounts payable, the auditor may consider __________.
4. When auditors find unrecorded liabilities, before adjusting they must consider __________.
5. Auditors need to consider __________ terms for determining ownership and whether a liability should be recorded.

after
confirmations
ratios
materiality
shipping

Question 28

In addition to trade accounts payable, many companies have other types of current liabilities. These include amounts withheld from employees’ pay, sales and other taxes payable, deposits, and other accrued liabilities.

Companies have many different types of current liabilities. These can include various taxes payable (income tax, sales tax, payroll tax), accrued amounts for salary, vacation or other benefits, and estimates such as accrued utilities and warranty. To adhere to the concept of the matching principle, companies must estimate the amount of their other liabilities.

Answer 28

Sales Tax Payable

Customer Deposit

Accrued Utilities

Accrued Utilities

Accrued Interest

look at 14 on hw

Question 29

1. Federal and state governments do not specify the exact __________ to be maintained, but do specify the amounts to be withheld.
2. Income taxes withheld from employees but not yet submitted to the government are considered to be a(n) __________.
3. When testing customer deposits, auditors typically review a(n) __________ of the individual deposits.
4. When testing other accrued liabilities, auditors may independently calculate the amount and __________ it to management’s estimate.
5. Property tax payments are typically __________ in number.

Answer 29

records

liability

list

compare

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