1. Which of the following controls would be most effective in assuring that recorded purchases are free of material errors?

A. Purchase orders, receiving orders, and vendors' invoices are independently matched in preparing vouchers.

B. Receiving reports require the signature of the individual who authorized the purchase.

C. Vendors' invoices are compared with the purchase orders by an employee who is independent of the receiving department.

D. The receiving department compares the quantity ordered on the purchase order with the quantity received on the receiving reports.

2. The Othello Corporation buys and sells widgets. In Year One, the average number of days that it took to sell a widget was 18. In Year Two, because of the downturn in the economy, the average number of days that it took to sell a widget rose to 27. Which of managements assertions about the balance being reported as inventory on the companys balance sheet would be of most concern to the independent auditor?

A. Presentation

B. Valuation

C. Existence

D. Completeness

3. A CPA firm is auditing the financial statements prepared by the Lion Corporation for the year ending December 31, Year One. The auditors are concerned that a number of accounts payable were not included in the year-end liabilities. Which of the following audit procedures would help the auditors make certain that the accounts payable balance is not understated?

A. Confirm a sample of the year-end accounts payable balances.

B. Review the cause for the cash disbursements made in the first month or two of Year Two.

C. Compare the balances in accounts payable to receiving reports created by the company.

D. Check the math and extensions on the accounts payable balances recorded during the last month of Year One

4. An auditor finds a journal entry where a company records the acquisition of a machine for $7,000 cash. The auditor then searches for the related source documentsoriginal documents on which the acquisition was initially recorded (such as a purchase requisition, receiving report, and vendor invoice). Which of the following assertions is the auditor most likely seeking evidence to substantiate?

A. Allocation

B. Presentation

C. Existence

D. Completeness

5. Which of the following is a substantive test that an auditor most likely would perform to verify the existence and valuation of recorded accounts payable?

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

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

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

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