cpa audit ch 7 review 7
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Accounting for payables is a -------------------------------------. The matching of the supplier’s invoice, the purchase order, and the receiving report (and usually the purchase requisition) should be the responsibility of the ----------------------------. These are the primary supporting documents for the payment voucher prepared by the accounts payable section that will be relied upon by the CFO in making payment.
recording function, accounting department
To avoid potential errors and fraud, well-designed internal control in the accounts payable area should include a segregation of which of what functions?
Cash disbursements and vendor invoice verification.
The functions of cash disbursements (custody of assets) and invoice verification (recordkeeping) should be segregated for effective internal control. Invoice verification should be done by an employee outside the CFO’s department.
What is usually a benefit of using electronic funds transfer for international cash transactions?
Reduction of the frequency of data entry errors.
The processing and transmission of electronic transactions, such as EFTs, virtually eliminates human interaction. This process not only helps eliminate errors but also allows for the rapid detection and recovery from errors when they do occur.
In the audit of what type of profit-oriented enterprises is the auditor most likely to place special emphasis on testing the controls over proper classification of payroll transactions?
A manufacturing organization.
A manufacturer is characteristically labor intensive with a high frequency and volume of payroll transactions requiring classification into direct labor and overhead. Payroll information is important in the costing of work-in-process, finished goods inventory, and cost of goods sold.
In a properly designed internal control system, the same employee most likely would match vendors’ invoices with receiving reports and also
Recompute the calculations on vendors’ invoices.
The vouchers payable clerk (1) matches purchase orders, vendors’ invoices, and receiving reports; (2) tests the calculations and terms on the vendors’ invoices; and (3) prepares a disbursement voucher.
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