Ch 14 E

Understatement of which of the following is most likely to overstate net income?

Accounts payable.

The auditors' verification of rapidly changing payable accounts is ordinarily most effective when performed

After the balance sheet date.

Which of the following audit procedures is least likely to detect an unrecorded liability?

Analysis and recompilation of depreciation expense.

An entity's internal control requires for every check request that 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 for testing from the population of:

Canceled checks.

The type of companies LEAST susceptible to financial statement fraud are:

Companies dealing with a period of constant growth

Ordinarily, the most significant assertion relating to accounts payable is:

Completeness

To assess the risk of misstatement, auditors design tests for

Completeness

Which audit objective would a search for unrecorded accounts payable satisfy?

Completeness

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

Detect accounts payable that are substantially past due

In performing a test of controls, the auditors vouch a sample of entries in the purchases journal to the supporting documents. Which assertion would this test of controls most likely test?

Existence

To determine that each voucher is submitted and paid only once, when a payment is approved, supporting documents should be cancelled by the:

Individual who signs the checks

According to the text, frequent flyer travel awards are similar to

Product warranty liabilities

Assume that a client recorded a payable for a large purchase twice. Which of the following controls would be most likely to detect this error in a timely and efficient manner?

Reconciling vendors' monthly statements with subsidiary payable ledger accounts

The least likely approach in auditing management's estimate relating to an accrued liability is to:

Send confirmations relating to the estimate

Which of the following best describes the auditors' approach to the audit of accrued liabilities?

Test computations

If you wanted to compare the amount spent on various expenses relative to the total expense amount, which of the following techniques would you be most likely to employ?

Vertical analysis

For good internal control, a copy of a receiving report should be sent to which of the following departments? (select all that apply)

ap, purchasing, stores