4. Which step in calculating the overall reasonableness test for annual depreciation is incorrect? Add one-half of the asset additions. Add one-half of the salvage values. Deduct all fully depreciated assets. Subtract one-half of the asset retirements.

5. For the risk of inaccurate recording of disbursements, what is the most likely internal control weakness? Inadequate segregation of duties in accounts payable Inadequate training for accounts payable employees Ineffective controls for matching shipping documents Ineffective controls for review of supporting documents

6. When auditing unclaimed wages, what is the auditor least likely trying to verify? Debits equal only authorized employee payments Debits equal transfers back to general funds Credits equal all unclaimed wages Credits equal required state payments

7. For the risk of failing to record PP&E retirements, what is the most likely internal control weakness? Failure to audit PP&E regularly Incompetent accounting personnel Insufficient accounting policies Pressure to meet asset targets

8. For the risk of misstated inventory quantities, what is the most likely internal control weakness? Ineffective accounting procedures for reconciliation Ineffective physical controls over inventory Ineffective segregation in receiving Ineffective technology for inventory counts

9. For the risk of recording unearned revenue, what is the most likely internal control weakness? Ineffective controls for testing billing information Ineffective input validation checks on shipping dates Ineffective processes in the receiving department Ineffective shipping department cutoff policy

10. For the risk of recording fictitious cash receipts, what is the most likely internal control weakness? Inadequate cashier supervision Inadequate security of deposits Ineffective bank reconciliation Ineffective register tape reconciliation

11. Which of the following audit tests would best confirm the validity of the client's bank reconciliation? Confirmation Cutoff statement Reperformance Sampling

12. In which situation would a positive confirmation be used to test the validity of a client's assets? Large number of small balances Low exception rate expected Low risk of material misstatement Small volume of large balances

13. Which audit assertion is met when testing prenumbered shipping and billing documents? Completeness Existence Rights Valuation

14. For the risk of recording revenue in the wrong period, what is the most likely internal control weakness? Ineffective controls for testing sales invoices Ineffective input validation checks on sales dates Ineffective processes in the billing department Ineffective shipping department cutoff policy

15. When a customer does not respond to a positive confirmation request, which auditor response would be incorrect? Apply alternative procedures to accounts No action if enough other responses were received Send additional confirmations on similar accounts Send second or third confirmation requests

16. For the risk of erroneous timing recognition of inventory purchases, what is the most likely internal control weakness? Ineffective accounting procedures for reconciliation Ineffective physical controls over inventory Ineffective segregation in receiving Ineffective technology for inventory counts

17. For proper controls over PP&E, periodic physical inventory counts should encompass which of the following objectives? Completeness Existence Rights Valuation

18. Which audit assertion is met when testing for unrecorded accounts payable? Existence Occurrence Valuation

19. For proper controls over PP&E, what should be in place for acquiring new capital assets? Board authorization Capital expenditure forms Capital revenue forms Capital work orders

20. For the risk of misstating PP&E values, what is the most likely internal control weakness? Failure to audit PP&E regularly Incorrect valuation methods Insufficient accounting policies Pressure to meet asset targets

21. Which of the following risks is inapplicable in evaluating the effectiveness of confirmations? Risk of nonresponse on erroneous accounts Risk of inaccuracy or inattention Risk of differences and exceptions Risk of omitting erroneous balances for testing

22. Which of the following internal controls helps ensure all cash receipts received are accounted for and deposited by the company? Batch total Control listing Data interchange Voucher system

23. Which of the following principles in determining PP&E depreciation values is incorrect? Acceptable depreciation method is used. Depreciation calculations are accurate. Depreciation in prior years was verified. Depreciation method is applied consistently.

24. Which of the following items would an auditor test using the methods for verifying accrued liabilities? Commissions Customer deposits Federal income tax Unclaimed wages

25. Which audit assertion is met when testing PP&E retirements throughout the year? Cutoff Existence Occurrence Valuation