Questions AUDIT

1.A written purchase order is a contractual document that is

a. an offer to buy goods or services.

b. prepared by the receiving department.

c. not enforceable if it is not in writing.

d. an acceptance of a vendor's catalog offer to sell.

2.When testing the controls for the completeness transaction-related audit objectives,

a. it is generally easy for the auditor to determine whether unrecorded transactions exist.

b. the audit time for accounts payable can be reduced if the client has effective internal controls and the auditor properly tests those controls.

c. failure to record the acquisition of goods or services will generally understate net income.

d. failure to record the acquisition of goods or services has no impact on the balance sheet.

3.Which of the following is not an accurate statement regarding the acquisition and payment cycle?

a. The accounting department should be responsible for receiving goods and preparing the receiving report.

b. The personnel in the receiving department should be independent of the storeroom personnel.

c. Accounting records should transfer responsibility for the goods each time they are moved.

d. Goods received should be physically controlled from the time of their receipt until their use or disposal.

4.Auditing the acquisition and payment cycle often takes more time than any other cycle.

Select one:

True

False

5.Auditor examines a vendor's statement when verifying individual acquisition transaction.

Select one:

True

False

6.When reviewing the controls and procedures in the acquisition and payment cycle,

a. personnel who record the acquisitions should not have access to cash or other assets.

b. the accounts payable department should account for all receiving reports to assure that the occurrence objective is satisfied.

c. the purchasing department has the responsibility for verifying for appropriateness of the acquisition.

d. companies cannot record the liability for the acquisition until the invoice is received from the vendor.

7.Which of the following is not a key control in the acquisition and payment cycle?

a. timely recording and independent review of transactions

b. authorization of purchases

c. authorization of credit

d. authorization of payments

8.Accounts payable cutoff tests are done to determine whether transactions recorded a few days before and after the balance sheet date are excluded in the correct period.

Select one:

True

False

9.Auditor compares acquisition-related expense account balance with prior years to detect possible misstatement of accounts receivables.

Select one:

True

False

10.A key internal control over the acquisition cycle is to ensure that the company requires recording transactions as soon as possible after the goods and services have been received. This satisfies the transaction-related audit objective of

a. occurrence.

b. completeness.

c. accuracy.

d. timing.