X05. Controls designed to reduce the risk of omissions, duplications, incorrect pricing and other types of errors in the billing process include all of the following except comparison of control totals for shipping documents with corresponding totals for sales invoices. a. b. Computer matching of sales invoice information with purchase order c. d. information. Computer matching of sales invoice information with sales order and shipping information. computer-programmed checks on the mathematical accuracy of sales invoices. computer matching of sales prices with an authorized price list and sales order prices in preparing the sales invoice. 32 e. X06. Which of the following analytical procedures may indicate possible inventory obsolescence problems when ratios are high? a. inventory turnover b. finished goods produced to raw material used c. inventory growth to cost of sales growth d. finished goods produced to direct labor e. product defects per million x07. During the observation of the inventory, the auditor has no responsibility to a. observe the taking of the inventory by client personnel. b. make some test counts of inventory quantities c. supervise the taking of the inventory d. make inquiries of the client concerning the inventories. e. watch for damages and obsolete inventory items X08. With a manufacturer, wholesaler, or retailer, inherent risk for inventory may be assessed at or near the maximum level for all of the following reasons except inventories are often stored at multiple sites, adding to the difficulties associated with maintaining physical controls over theft and damages, and properly accounting for goods in transit between sites a. b. the wide diversity of inventory tems may present special problems in determining their quality and market value. inventories are vulnerable to spoilage, obsolescence, and other factors such as general economic conditions that may affect demand and salability, and thus the proper valuation of the inventories c. d. inventory may be sold subject to right of return and repurchase agreements e. the volume of purchases, manufacturing, and sales transactions that affects these accounts is generally high, decreasing the opportunities for misstatement to occur The following statement about inherent risk for long-lived assets is not true: a. X09. The rights and obligations assertion is significant because assets are usually pledged as collateral for the underlying debt Impairment of long-lived assets poses an inherent risk for the valuation assertion b. c. The completeness assertion rarely presents a high inherent risk d. Misstatements of disclosures represent only a moderate inherent risk Inherent risk for the existence assertion is low. e
