acct 241 ch 9

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wsrdpc
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acct 241 ch 9
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2010-09-04 19:44:50
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acct 241 ch 9
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  1. Inventory should be recorded when
    A. the company has title to it
    B. When the related revenue is recognized
    C. When it is shipped from the vendor
    D. when it is received
    A. the company has title to it
    (this multiple choice question has been scrambled)
  2. The overall production authorization starts with a
    A. purchase order
    B. production plan
    C. sales forecast
    D. bill of materials
    B. production plan
    (this multiple choice question has been scrambled)
  3. Which of the following is not recognized by GAAP as appropriate for determining inventory cost?
    A. Standard costs
    B. Weighted average
    C. FIFO
    D. LIFO
    A. Standard costs
    (this multiple choice question has been scrambled)
  4. The source of authorization for preparation of materials requisitions is
    A. bill of materials
    B. purchase order
    C. production plan
    D. sales forecast
    A. bill of materials
    (this multiple choice question has been scrambled)
  5. Comparing material usage reports to raw material stores issue slips is a control to help insure which ASB transaction assertion?
    A. rights and obligations
    B. occurrence
    C. completeness
    D. valuation or accuracy
    B. occurrence
    (this multiple choice question has been scrambled)
  6. Responsibility for the physical count lies with the
    A. auditor
    B. inventory specialist
    C. vendor
    D. client
    D. client
    (this multiple choice question has been scrambled)
  7. Client's inventory instructions should include all the following except
    A. instructions for auditors' test counts
    B. names of client personnel responsible for the count
    C. instructions for recording accurate descriptions
    D. plans for controlling movement of goods
    A. instructions for auditors' test counts
    (this multiple choice question has been scrambled)
  8. Tracing a test count to the inventory compilations provides evidence for which ASB balance assertions?
    A. presentation and disclosure
    B. valuation
    C. existence
    D. completeness
    D. completeness
    (this multiple choice question has been scrambled)
  9. Hiring and firing employees is a function that should be performed by
    A. the employee's supervisor
    B. personnel
    C. cost accounting
    D. payroll accounting
    B. personnel
    (this multiple choice question has been scrambled)
  10. The record where the employee's income taxes payable are recorded is the
    A. payroll register
    B. clearing account
    C. labor cost analysis
    D. personnel files
    A. payroll register
    (this multiple choice question has been scrambled)
  11. Which of the following is an internal control weakness for a company whose inventory of supplies consists of a large number of individual items?
    A. prepetual inventory records are maintained only for items of significant value
    B. the cycle basis is used for physical counts
    C. supplies of relatively little value are expensed when purchased
    D. the warehouse manager is responsible for maintance of perpetual inventory records
    D. the warehouse manager is responsible for maintance of perpetual inventory records
    (this multiple choice question has been scrambled)
  12. Which of the following procedures would best detect the theft of valuable items from an inventory that consists of hundreds of different items selling for $1 to $10 and a few items selling for hundreds of dollars?
    a. maintain a perpetual inventory of only the more valuable items with frequent periodic verification of the accuracy of the perpetual inventory record
    b. have an independent CPA term prepare an internal control report on the effectiveness of the controls over inventory
    c. have separate warehouse space for the more valuable items with frequent periodic physical counts and comparison to perpetual inventory reocrds
    • c. have separate warehouse space for the more valuable items with
    • frequent periodic physical counts and comparison to perpetual inventory
    • reocrds
  13. An auditor will usually trace the details of the best counts made during the observation of the physical inventory taking to a final inventory compilation. The 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:
    A. included in the final inventory schedule
    B. physically present at the time of the final invetory schedule
    C. not obsolete
    D. owned by the client
    A. included in the final inventory schedule
    (this multiple choice question has been scrambled)
  14. They physical count of inventory of a retailer was higher than shown by the perpetual records. Which of the following could expain the difference?
    A. Inventory items had been counted, but the tags placed on the items had not been taken off the items and added to the inventory accumulation sheets
    B. no journal entry had been made on the retailer's books for several items returned to its suppliers
    C. An item purchased "FOB shipping point" had not arrived at the date of the inventory count and had not been reflected in the perpetual records
    D. credit memos for several items returned by customers had not been recorded
    D. credit memos for several items returned by customers had not been recorded
    (this multiple choice question has been scrambled)
  15. From the auditor's point of view, inventory counts are not more acceptable prior to the year end when:
    A. inventory is slow moving
    B. accurate perpetual inventory records are maintained
    C. internal control is weak
    D. significant amounts of inventory are held on a consignment basis
    B. accurate perpetual inventory records are maintained
    (this multiple choice question has been scrambled)
  16. Which of the following client internal control procedures most likely addresses the completeness assertion for inventory?
    A. there is a separation of duties between the payroll department and inventory accounting personnel
    B. the work in process account is periodically reconciled with subsidiary inventory records
    C. employees responsible for custody of finished goods do not perform the receiving function
    D. receiving reports are pre numbered and the numbering sequence is checked periodically
    D. receiving reports are pre numbered and the numbering sequence is checked periodically
    (this multiple choice question has been scrambled)
  17. When auditing inventories, and auditor would least likely verify that:
    A. the client has used proper inventory pricing
    B. all inventory owned by the client is on hand at the time of the count
    C. damaged goods and obsolete items have been properly accounted for
    D. the financial statement presentation of inventories is appropriate
    B. all inventory owned by the client is on hand at the time of the count
    (this multiple choice question has been scrambled)
  18. A client maintains perpetual inventory records in quantities and in dollars. If the assessed level of control risk is high, an auditor would propably:
    A. apply gross profit tests to ascertain the reasonableness of the physical counts
    B. request the client to schedule the physical inventory count at the end of the year
    C. increase the extent of tests of controls relevant to the inventory cycle
    D. insist the client perform physical counts of inventory items several times during the year
    B. request the client to schedule the physical inventory count at the end of the year
    (this multiple choice question has been scrambled)
  19. An auditor selected items for test counts while observing a client's physical inventory. The auditor then traced the test counts to the client's inventory listing. This procedure most likely obtained evidence concerning management's assertion of:
    A. valuation
    B. rights and obligations
    C. existence or occurence
    D. completeness
    D. completeness
    (this multiple choice question has been scrambled)
  20. Which of the following audit procedures propably would provide the most reliable evidence concerning the entity's assertion of rights and obligations related to inventories?
    A. inspect agreements to determine whether any inventory is pledged as collateral or subject to any liens
    B. inspect the open purchase order file for significant commitments that should be considered for disclosure
    C. select the last few shipping advices used before the physical count, and determine whether the shipments were recorded as sales
    D. trace test counts noted during the entity's physical count to the entity's summarization of quantities
    A. inspect agreements to determine whether any inventory is pledged as collateral or subject to any liens
    (this multiple choice question has been scrambled)
  21. An auditor most likey would analyze inventory turnover rates to obtain evidence concerning management's assertions about:
    A. presentation and disclosure
    B. valuation
    C. existence of occurrence
    D. rights and obligations
    B. valuation
    (this multiple choice question has been scrambled)
  22. Effective internal control over the payroll function should include procedures that segregate the duties of making salary payments to employees and:
    A. maintaining employee personnel records
    B. approving employee fringe benefits
    C. hiring new employees
    D. controlling unemployement insurance claims
    C. hiring new employees
    (this multiple choice question has been scrambled)
  23. During the year, a bookkeeper perpetrated a theft by preparing erroneous W-2 forms. The bookkeeper's FICA withheld was overstated by $500, and the FICA withheld from all other employees was understated. Which of the following is an audit procedure that would detect such a fraud?
    A. multiplication of the applicable FICA rate by the individual gross taxable earnings
    B. Footing and cross-footing the payroll register followed by tracing postings to the general ledger
    C. vouching cancelled checks to federal tax form 941
    D. Utilizing form W-4 and withholding charts to determine whether deductions authorized per pay period agree with amounts per pay period
    A. multiplication of the applicable FICA rate by the individual gross taxable earnings
    (this multiple choice question has been scrambled)
  24. A common audit procedure in the audit of payroll transactions involves vouching selected items from the payroll journal to employee time cards that have been approved by supervisory personnel. This procedure is designed to provide evidence in support of the audit proposition that:
    A. all employees worked the number of hours for which their pay was computed
    B. on jobs which employees worked, their pay was properly computed
    C. internal controls relating to payroll disbursements are operating effectively
    D. only bona fide employees worked and their pay was properly conmputed
    A. all employees worked the number of hours for which their pay was computed
    (this multiple choice question has been scrambled)
  25. The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the:
    A. human resources function from the controllership function
    B. administrative controls from the internal accounting controls
    C. authroization of transactions from the custody of related assets
    D. operational responsibility from the record keeping responsibility
    C. authroization of transactions from the custody of related assets
    (this multiple choice question has been scrambled)
  26. Which of the following deparments most likely would approve changes in pay rates and deductions from employee salaries?
    A. treasurer
    B. payroll
    C. personnel
    D. controller
    C. personnel
    (this multiple choice question has been scrambled)
  27. A large retail enterprise has established a policy the requires the paymaster to deliver all unclaimed payroll checks to the internal audit department at the end of each payroll distribution day. This policy was most likely adopted to:
    A. prevent the paymaster from cashing checks that are unclaimed for several weeks
    B. detect any fictitious employee who may have been placed on the payroll
    C. assure that employees who were absent on a payroll distribution day are not paid for that day
    D. prevent a bona fide employee's check from being claimed by another employee
    B. detect any fictitious employee who may have been placed on the payroll
    (this multiple choice question has been scrambled)

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