acct 241 ch 8

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  1. A "voucher" is a
    a. document received from the vendor to request payment
    b. an authorization to prepare a purchase order
    c. a check that has been prepared and fowarded for signing
    d. none of the above
    d. none of the above
  2. A "blind purchase order" is a
    A. purchase order with the quantity deleted to be used as a receiving report
    B. a blanket purchase order for goods to be received throughout the year
    C. an automatic purchase performed using electronic data interchange
    d. none of the above
    A. purchase order with the quantity deleted to be used as a receiving report
    (this multiple choice question has been scrambled)
  3. Which of the following accounts is not included in the acquisition and expenditure cycle?
    A. sales returns and allowance
    B. inventory
    C. frieght in
    D. cash
    A. sales returns and allowance
    (this multiple choice question has been scrambled)
  4. Canceling invoices with a "paid" stamp after payment is a control that relates to which assertion?
    A. existence or occurance
    B. completeness
    C. rights and obligationss
    D. valuation or allocation
    A. existence or occurance
    (this multiple choice question has been scrambled)
  5. Which of the following is not a steop in the search for unrecorded liabilities?
    A. examine the unmatched receiving reports
    B. examine the open purchase order file
    C. examine disbursements for the period immediately before the end of the period
    d. all of the above are steps in the search
    C. examine disbursements for the period immediately before the end of the period
    (this multiple choice question has been scrambled)
  6. Which of the following fraud signs could be detected by CAAT?
    a. look for vendor's invoices submitted in numerical order
    b. look for invoices always slightly lower than a review threshold
    c. look for vendors with only post office box addresses
    d. all of the above
    d. all of the above
  7. Which of the following control questions relates to the existence and occurrence objective in purchasing and accounts payable?
    A. are recieving reports prepared for each item received?
    B. are the purchase order forms prenumbered and the numerical sequence checked for missing documents?
    C. does the accounting department check invoices for mathematical accuracy?
    D. does the chart of accounts and accounting manual give instructions for classifying debit entries?
    A. are recieving reports prepared for each item received?
    (this multiple choice question has been scrambled)
  8. Auditors usually focus on which assertion when auditing current liabilities?
    A. acccuracy
    B. classification
    C. completeness
    D. occurence
    C. completeness
    (this multiple choice question has been scrambled)
  9. If goods ordered under a binding purchase commitment permanently decline in value below the agreed on purchase prices, a company should.
    A. record a loss for items received
    B. disclose the terms of the commitment in the financial statements
    C. record a loss for items not yet received
    d. none of the above
    C. record a loss for items not yet received
    (this multiple choice question has been scrambled)
  10. The purchasing department
    A. should obtain competive bids from vendors
    B. should inspect incoming goods and forward them to the recieving department
    C. should inspect vendor invoices and forward them to the accounting department
    d. all of the above
    A. should obtain competive bids from vendors
    (this multiple choice question has been scrambled)
  11. Which of the following would not overstate current period net income?
    A. capitalizing an expenditure that should be expensed
    B. failing to record a check paying an item in Vouchers Payable
    C. failing to record a liability for an expenditure
    d. all of the above would overstate net income
    B. failing to record a check paying an item in Vouchers Payable
    (this multiple choice question has been scrambled)
  12. 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?
    A. acquisition of materials is not made from one vendor or one group of vendors
    B. accounts payable are not materially understated
    C. commitments for all purchases are made only after established competitive bidding procedures are followed
    D. authority to incur liabilities is restricted to one designated person
    B. accounts payable are not materially understated
    (this multiple choice question has been scrambled)
  13. Which of the following is an internal control activity that could prevent a paid disbursement voucher from being presented for payment a second time?
    A. vouchers should be prepared by individuals who are responsible for signing disbursement checks
    B. disbursement vouchers should be approved by at leaset 2 responsible management officials
    C. the date on a disbursement voucher should be within a few days of the date the voucher is presented for payment
    D. the official signing the check should compare the check with the voucher and should stamp "paid" on the vourcher documents
    D. the official signing the check should compare the check with the voucher and should stamp "paid" on the vourcher documents
    (this multiple choice question has been scrambled)
  14. 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:
    A. cash receipts
    B. purchase orders
    C. purchase requisitions
    D. perpetual inventory records
    B. purchase orders
    (this multiple choice question has been scrambled)
  15. Which of the following is the best audit procedure for determining the existence of unrecorded liabilities?
    A. examine a sample of invoices a few days prior to and subsequent to the year-end to ascertain whether they have been properly recorded
    B. examine confirmation requests returned by creditors whose accounts appear on a subsidiary trail balance of accounts payable
    C. examine a sample of cash disbursements in the period subsequent to year-end
    D. examine unusual relationships between monthly accounts payable and recorded purchases
    C. examine a sample of cash disbursements in the period subsequent to year-end
    (this multiple choice question has been scrambled)
  16. Which of the following procedures is least likely to be performed before the balance sheet date?
    A. confirmation of receivables
    B. search for unrecorded liabilities
    C. review of internal control over cash disbursements
    D. observation of inventory
    B. search for unrecorded liabilities
    (this multiple choice question has been scrambled)
  17. To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population for this test consists of all:
    A. vendors' invoices
    B. purhcase orders
    C. receiving reports
    D. canceled checks
    C. receiving reports
    (this multiple choice question has been scrambled)
  18. When verifying debits to the perpetual inventory records of a non-manufacturing company, an auditor would be most interested in examining a sample of purhcase:
    A. orders
    B. requisitions
    C. approvals
    D. invoices
    D. invoices
    (this multiple choice question has been scrambled)
  19. In auditing accounts payable, an auditor's procedures most likely would focus primarily on management's assertion of:
    A. completeness
    B. valuation or allocation
    C. existence or occurence
    D. presentation and disclosure
    A. completeness
    (this multiple choice question has been scrambled)
  20. Before expressing an opinion concerning the auditor of income and expenses, the auditor would best proceed with the audit of the income statement by:
    A. auditing income statement accounts concurrently withthe related balance sheet accounts
    B. making net income comparisons to published industry trends and ratios
    C. analyzing the beginning and ending balance sheet inventory amounts
    D. applying a rigid measurement standard designed to test for understatement of net income
    A. auditing income statement accounts concurrently withthe related balance sheet accounts
    (this multiple choice question has been scrambled)
Author:
wsrdpc
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29232
Card Set:
acct 241 ch 8
Updated:
2010-08-07 19:13:30
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acct 241 ch 8
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