QUESTIONS AUDIT

1.When a client uses perpetual inventory records, the tests of details of balances for inventory can be significantly reduced if the auditor believes the records are accurate. The controls over the acquisitions included in the records are normally tested as a part of the

a. tests of controls and substantive tests of transactions for acquisitions.

b. tests of controls for acquisitions.

c. analytical procedures and tests of controls for acquisitions.

d. tests of details of balances for acquisitions.

2.Which of the following is the most effective control procedure to detect vouchers that were prepared for the payment of goods that were not received?

a. Verify vouchers for accuracy and approval in internal audit department.

b. Compare goods received with goods requisitioned in receiving department.

c. Match purchase order, receiving report, and vendor's invoice for each voucher in accounts payable department.

d. Count goods upon receipt in storeroom.

3.Which of the following business functions is not considered to be part of the acquisitions class of transactions?

a. processing cash disbursements

b. processing purchase orders

c. recognizing liabilities

d. receiving goods and services

4.Which of the following business functions is not considered to be part of the acquisitions class of transactions?

a. processing cash disbursements

b. processing purchase orders

c. recognizing liabilities

d. receiving goods and services

5.Which of the following should sign cheque under conditions of effective internal control?

a. Accounts payable clerk

b. Purchasing agent

c. Person preparing the cheque

d. Treasurer

6.Which of the following is a key internal control for theposting and summarizationtransaction-related audit objective?

a. The accounts payable master file contents are internally verified.

b. Batch totals are compared with computer summary reports.

c. Documents are cancelled.

d. Dates are internally verified.

7.Auditors typically set tolerable misstatement for account payable relatively high.

Select one:

True

False

8.You are performing the audit of Joyah Sdn Bhd. Your tests of controls and tests of transactions for accounts payable demonstrate that the controls are operating effectively. This would normally allow you to

a. increase the need for substantive testing of balances for accounts payable.

b. eliminate the need for substantive testing of balances for accounts payable.

c. reduce the need for substantive testing of balances for accounts payable.

d. reduce control tests in other transactions cycles.

9.Auditors can determine whether inventory has been acquired FOB destination or origin by examining shipping documents.

Select one:

True

False

10.Which of the following tests of controls isleast usefulin assessing the transaction-related audit objective related to occurrence?

a. Attempt to input transactions with valid and invalid vendors.

b. Examine supporting documents for indication of approval.

c. Account for sequence of vouchers.

d. Examine documents in voucher package for occurrence.

11.Careful examination of supporting documents by the cheque signer after the cheque is signed and released to the vendor is one of main controls for authorization for payment.

Select one:

True

False