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

Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payables apply to the prior period. Reconciling accounts payable to the general ledger. Investigating payables recorded just prior and subsequent to the balance sheet date to see if they are supported by receiving reports.

2.	Which one of the following is not a typical accrued liability presented on the balance sheet?

Compensated absences Accrued interest. Accrued deposits on utilities.

3.	An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and the cash disbursements journal. What was the purpose behind this test?

To determine that purchases were properly recorded. To investigate large purchase for fraud. To verify that the cash disbursements were for goods that had been received.

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

Confirmation of accounts payable Search for unrecorded liabilities. Assessment of control risk

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

Vendors with whom the entity has previously done business. Amounts recorded in the accounts payable subsidiary ledger. Invoices filed in the entitys open invoice file.

6.	When should management accrue a liability for warranties?

It is probable that a liability has been incurred and it can be reasonably estimated. When a reasonable estimate can be computed When there is a product liability lawsuit.

7.	Which procedure would the auditor least likely perform on long mortgage payable?

Perform analytical procedures on the interest expense and accrued interest. Confirm the debt. Identify the property associated with the debt and test to see if its value has been impaired.

8.	Which of the following assertions is primarily tested when testing an entitys restrictive debt covenants?

Completeness . Valuation Classification .

9.	ASC 850 addresses related party transactions. Which of the following is true?

Related party balances and the dollar value of related party transactions should be disclosed. ASC 850 addresses the accounting measurement guidance for related party transactions. Related party transactions should be at fair value or it is considered an instance of fraud.

10.	Which of the following is false concerning lines of credit?

Lines of credit are often used to manage cash flow. Lines of credit are due on demand. Lines of credit must be disclosed even if there is a zero balance.