Question 1

A receiving report is used to document the ordering of goods.

Accepted Answer

A) True 
 B)False

Question 2

An entity erroneously recorded a large purchase twice. Which of the following internal controls would be most likely to detect this error in a timely and efficient manner?

Accepted Answer

A)   Footing the purchases journal.
B)   Reconciling vendors' monthly statements with subsidiary payable ledger accounts.
C)   Tracing totals from the purchases journal to the ledger accounts.
D)   Sending written quarterly confirmations to all vendors.

Question 3

The principal business objectives of the purchasing process are acquiring goods and services and paying for those goods and services.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is a substantive procedure that an auditor most likely would perform to verify the existence of recorded accounts payable?

Accepted Answer

A)   Investigating the open purchase order file to ascertain that prenumbered purchase orders are used and accounted for.
B)   Receiving the entity's mail, unopened, for a reasonable period of time after the year-end to search for unrecorded vendor's invoices.
C)   Vouching 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.

Question 5

The cutoff assertion for accounts payable includes

Accepted Answer

A)   Determining whether all accounts payable are recorded.
B)   Determining whether all accounts payable actually are liabilities.
C)   Determining whether all accounts payable are recorded in the proper period.
D)   Determining whether all accounts payable are properly classified in the financial statements.

Question 6

Which of the following procedures relating to the examination of accounts payable could the auditor delegate entirely to the entity's employees?

Accepted Answer

A)   Test footings in the accounts payable ledger.
B)   Reconcile unpaid invoices to vendors' statements.
C)   Prepare a schedule of accounts payable.
D)   Mail confirmations for selected account balances.

Question 7

An examination of the balance in the accounts payable account is ordinarily not designed to

Accepted Answer

A)   Determine that the amounts represent obligations of the company.
B)   Verify that accounts payable were properly authorized.
C)   Ascertain the reasonableness of recorded liabilities.
D)   Determine that all existing liabilities at the balance sheet date have been recorded. B

Question 8

With respect to a small company's system of purchasing supplies, an auditor's primary concern should be to obtain satisfaction that supplies ordered and paid for have been

Accepted Answer

A)   Requested and approved by authorized individuals who have no incompatible duties.
B)   Received, counted, and checked to quantities and amounts on purchase orders and invoices.
C)   Properly recorded as assets and systematically amortized over the estimated useful life of the supplies.
D)   Used in the course of business and solely for business purposes during the year under audit.

Question 9

For effective internal control, the accounts payable department should compare the information on each vendor's invoice with the

Accepted Answer

A)   Receiving report and the purchase order.
B)   Receiving report and the voucher.
C)   Vendor's packing slip and the purchase order.
D)   Vendor's packing slip and the voucher.

Question 10

An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and the cash disbursements journal. The purpose of this substantive procedure most likely was to

Accepted Answer

A)   Identify unusually large purchases that should be investigated further.
B)   Verify that cash disbursements were for goods actually received.
C)   Determine that purchases were properly recorded.
D)   Test whether payments were for goods actually ordered. C

Question 11

An entity's internal control requires that for every check request there be an approved voucher, supported by a prenumbered purchase order and a prenumbered receiving report. To determine whether checks are being issued for unauthorized expenditures, an auditor most likely would select items for testing from the population of all

Accepted Answer

A)   Purchase orders.
B)   Canceled checks.
C)   Receiving reports.
D)   Approved vouchers.

Question 12

To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population of documents for this test consists of all

Accepted Answer

A)   Payment vouchers.
B)   Receiving reports.
C)   Purchase requisitions.
D)   Vendors' invoices.

Question 13

If payables turnover has increased significantly since the prior year, this is an indication that which of the following assertions for accounts payable might be violated?

Accepted Answer

A)   Existence or occurrence.
B)   Completeness.
C)   Rights and obligations.
D)   Valuation and allocation.

Question 14

Which of the following accounts is not affected by cash disbursement transactions?

Accepted Answer

A)   Cash.
B)   Accounts payable.
C)   Purchase discounts.
D)   Purchase returns. D

Question 15

An auditor compares information on canceled checks with information contained in the cash disbursements journal. The objective of this test is to determine that

Accepted Answer

A)   Recorded cash disbursement transactions are properly authorized.
B)   Proper cash purchase discounts have been recorded.
C)   Cash disbursements are for goods and services actually received.
D)   No discrepancies exist between the data on the checks and the data in the journal.

Question 16

Accounts payable confirmations are used to test

Accepted Answer

A)   Both the existence and completeness audit assertions.
B)   Only the existence audit assertion.
C)   Only the completeness audit assertion.
D)   Either existence or completeness, depending upon the response rate.

Question 17

The mailing of disbursement checks and remittance advices should be controlled by the employee who

Accepted Answer

A)   Signed the checks last.
B)   Approved the vouchers for payment.
C)   Matched the receiving reports, purchase orders and vendors' invoices.
D)   Verified the mathematical accuracy of the vouchers and remittance advices.

Question 18

Match the test of controls described below to the appropriate assertion it is used to test.

Accepted Answer

The answer of Match the test of controls described below...

Question 19

Identify whether the following tests are substantive analytical procedures, tests of details of transactions, or tests of details of account balances:
1) Test a sample of purchase requisitions for proper authorization.
2) Test transactions around year-end to determine if they are recorded in the proper period.
3) Review results of confirmation of selected accounts payable.
4) Compare payables turnover to previous years' data.
5) Obtain selected vendors' statements and reconcile to vendor accounts.
6) Compare purchase returns and allowances as a percentage of revenue or cost of sales to industry data.

Accepted Answer

1) Tests of details of transactions.
2) ...

Question 20

Substantive procedures to examine the completeness assertion for accounts payable include

Accepted Answer

A)   Selecting a sample of vouchers and agreeing them to authorized purchase orders.
B)   Selecting a sample of vouchers and tracing them to the purchases journal.
C)   Comparing dates on vouchers to dates in the purchases journal.
D)   Recomputing the mathematical accuracy of a sample of vendor invoices.

Exam 11: Auditing the Purchasing Process

A receiving report is used to document the ordering of goods.

Correct Answer
verified

An entity erroneously recorded a large purchase twice. Which of the following internal controls would be most likely to detect this error in a timely and efficient manner?

Correct Answer
verified

The principal business objectives of the purchasing process are acquiring goods and services and paying for those goods and services.

Correct Answer
verified

Which of the following is a substantive procedure that an auditor most likely would perform to verify the existence of recorded accounts payable?

Correct Answer
verified

The cutoff assertion for accounts payable includes

Correct Answer
verified

Which of the following procedures relating to the examination of accounts payable could the auditor delegate entirely to the entity's employees?

Correct Answer
verified

An examination of the balance in the accounts payable account is ordinarily not designed to

Correct Answer
verified
B

With respect to a small company's system of purchasing supplies, an auditor's primary concern should be to obtain satisfaction that supplies ordered and paid for have been

Correct Answer
verified

For effective internal control, the accounts payable department should compare the information on each vendor's invoice with the

Correct Answer
verified

An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and the cash disbursements journal. The purpose of this substantive procedure most likely was to

Correct Answer
verified
C

Correct Answer
verified

To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population of documents for this test consists of all

Correct Answer
verified

If payables turnover has increased significantly since the prior year, this is an indication that which of the following assertions for accounts payable might be violated?

Correct Answer
verified

Which of the following accounts is not affected by cash disbursement transactions?

Correct Answer
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D

An auditor compares information on canceled checks with information contained in the cash disbursements journal. The objective of this test is to determine that

Correct Answer
verified

Accounts payable confirmations are used to test

Correct Answer
verified

The mailing of disbursement checks and remittance advices should be controlled by the employee who

Correct Answer
verified

Match the test of controls described below to the appropriate assertion it is used to test.

Correct Answer
verified

Correct Answer
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1) Tests of details of transactions.
2) ...
View Answer

Substantive procedures to examine the completeness assertion for accounts payable include

Correct Answer
verified

Exam 11: Auditing the Purchasing Process

A receiving report is used to document the ordering of goods.

Correct AnswerverifiedShow Answer

An entity erroneously recorded a large purchase twice. Which of the following internal controls would be most likely to detect this error in a timely and efficient manner?

Correct AnswerverifiedShow Answer

The principal business objectives of the purchasing process are acquiring goods and services and paying for those goods and services.

Correct AnswerverifiedShow Answer

Which of the following is a substantive procedure that an auditor most likely would perform to verify the existence of recorded accounts payable?

Correct AnswerverifiedShow Answer

The cutoff assertion for accounts payable includes

Correct AnswerverifiedShow Answer

Which of the following procedures relating to the examination of accounts payable could the auditor delegate entirely to the entity's employees?

Correct AnswerverifiedShow Answer

An examination of the balance in the accounts payable account is ordinarily not designed to

Correct AnswerverifiedB

With respect to a small company's system of purchasing supplies, an auditor's primary concern should be to obtain satisfaction that supplies ordered and paid for have been

Correct AnswerverifiedShow Answer

For effective internal control, the accounts payable department should compare the information on each vendor's invoice with the

Correct AnswerverifiedShow Answer

An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and the cash disbursements journal. The purpose of this substantive procedure most likely was to

Correct AnswerverifiedC

Correct AnswerverifiedShow Answer

To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population of documents for this test consists of all

Correct AnswerverifiedShow Answer

If payables turnover has increased significantly since the prior year, this is an indication that which of the following assertions for accounts payable might be violated?

Correct AnswerverifiedShow Answer

Which of the following accounts is not affected by cash disbursement transactions?

Correct AnswerverifiedD

An auditor compares information on canceled checks with information contained in the cash disbursements journal. The objective of this test is to determine that

Correct AnswerverifiedShow Answer

Accounts payable confirmations are used to test

Correct AnswerverifiedShow Answer

The mailing of disbursement checks and remittance advices should be controlled by the employee who

Correct AnswerverifiedShow Answer

Match the test of controls described below to the appropriate assertion it is used to test.

Correct AnswerverifiedShow Answer

Correct Answerverified1) Tests of details of transactions.2) ...View AnswerShow Answer

Substantive procedures to examine the completeness assertion for accounts payable include

Correct AnswerverifiedShow Answer

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Correct Answer
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B

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C

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D

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Correct Answer
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Correct Answer
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1) Tests of details of transactions.
2) ...
View Answer

Correct Answer
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