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Study guide for auditing class to use to study for final exam 1. Which of the following accounts does not appear in the acquisition and expenditure cycle? 2. For which of the following accounts would the matching concept be the most appropriate? 3. Which of the following would not overstate current period net income? 4. A client's purchasing system ends with the recording of a liability and its eventual payment. Which of the following best describes the auditor's primary concern with respect to liabilities resulting from the purchasing system? 5. Which of the following is an internal control activity that could prevent a paid disbursement voucher from being presented for payment a second time? 6. Budd, the purchasing agent of Lake Hardware Wholesalers, has a relative who owns a retail hardware store. Budd arranged for hardware to be delivered by manufacturers to the retail store on a COD basis,
thereby enabling his relative to buy at Lake's wholesale prices. Budd was probably able to accomplish this because of Lake's poor internal control over 7. Which of the following is the best audit procedure for determining the existence of unrecorded liabilities? 8. Which of the following procedures is least likely to be performed before the balance sheet date? 9. To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received has been recorded. The population for this test consists of all 10. When verifying debits to the perpetual inventory records of a
nonmanufacturing company, an auditor would be most interested in examining a sample of purchase 11. A furniture company ordered 84 tables from a supplier. The supplier accidentally sent only 48 tables. The tables were accepted by the receiving department at the furniture company. The invoice was eventually received but was for the original 84 tables. The furniture company paid the entire amount. Which of the following
controls would have been least likely to have prevented this erroneous payment? 12. Curtis, a maintenance supervisor, submitted maintenance invoices from a phony repair company and received the checks at a post office box. This should have been prevented by 13. For which of the following accounts would an auditor most likely examine support for the detail charges? 14. Which of the following accounts would most likely be audited in connection with a related balance sheet account? 15. Which cycle is not linked to the production cycle? 16. To determine the client's planned amount and timing of production of a product, the auditor will review the 17. An auditor reviews job
cost sheets to test which assertion? 18. Which of the following is an internal control weakness for a company whose inventory of supplies consists of a large number of individual items? 19. To make a year-to-year comparison of inventory turnover meaningful, the auditor will perform the analysis 20. An auditor will usually trace the details of the test counts during the observation of the taking of physical inventory to a final inventory compilation. This
audit procedure is undertaken to provide evidence that items physically present and observed by the auditor at the time of the physical inventory count are https://brainmass.com/business/external-auditing/year-four-study-guide-for-auditing-final-exam-341151 Solution Preview1. A/The other three items are either acquisitions or expenditures. Unidentified cash is neither. 2. A/ The "matching concept" is one in which expenses are recognized in the income statement. 3. B/Failing to record a liability, a decrease in income, could certainly lead to the overstatement of an income statement. 4. B/Liabilities are always a negative to a business and as such should be controlled by the authorization limited to only one authority. 5. D/These precautions will prevent any invoice from being re-submitted for payment. 6. D/Internal control of purchase orders would prevent orders being prepared under illegal circumstances. 7. D/Unusual relationships between accounts payable and recorded purchases should reveal any amounts attributable to unrecorded ... Solution SummaryTwenty multiple choice questions are asked in preparing the year four student for a final exam in an auditing class. ADVERTISEMENTWhen auditing liabilities account balances auditors are most concerned with management assertion about?audit 8. Which of the following audit procedures is best for identifying unrecorded accounts payable?Which of the following audit procedures is best for identifying unrecorded trade accounts payable? Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payable applies to the prior period.
Which of the following procedures is least likely to be performed before the balance sheet date?Search for unrecorded liabilities. Because a significant portion of the search for unrecorded liabilities deals with transactions recorded after year-end, it is least likely to be completed before the balance sheet date.
Which of the following is not a control over cash disbursement?The answer is: D) Have monthly bank reconciliations prepared by employees not responsible for the issuance of checks. 3) Which of the following is not control over cash disbursements? The answer is: D) Voided checks should be defaced and filed with paid checks.
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