Auditing II: Chapter 14 Homework Review

Ordinarily, the most significant assertion relating to accounts payable is: a. Completeness b. Existence c. Presentation d. Valuation

Completeness

Which of the following is the best audit procedure for determining the existence of unrecorded liabilities? a. Examine confirmation requests returned by creditors who accounts appear on a subsidiary trial balance of accounts payable b. Examine unusual relationships between monthly accounts payable balances and recorded purchases c. Examine a sample of invoices a few days prior to and subsequent to year-end to ascertain whether they have been properly recorded d. Examine selected cash disbursements in the period subsequent to year-end

Examine selected cash disbursements in the period subsequent to year-end

To determine that each voucher is submitted and paid only once, when a payment is approved, supporting documents should be canceled by the: a. Authorized members of the audit committee b. Accounting department c. Individual who signs the checks d. Chief executive officer

Individual who signs the checks

For effective internal control, the accounts payable department should compare the information on each vendor invoice with the: a. Receiving report and purchase order b. Receiving report and the voucher c. Vendor's packing slip and purchase order d. Vendor's packing slip and the voucher

Receiving report and purchase order

A client erroneously recorded a large purchase twice. Which of the following internal control measures would be most likely to detect this error in a timely and efficient manner? a. Footing the purchases journal b. Reconciling vendors' monthly statements with subsidiary payable ledger accounts c. Tracing totals from the purchases journal to the ledger accounts d. Sending written quarterly confirmation to all vendors

Reconciling vendors' monthly statements with subsidiary payable ledger accounts

Which of the following procedures is least likely to be completed before the balance sheet date? a. Confirmation of receivables b. Search for unrecorded liabilities c. Observation of inventory d. Review of internal accounting control over cash disbursements

Search for unrecorded liabilities

The least likely approach in auditing management's estimate relating to an accrued liability is to: a. Independently develop and estimate of the amount to compare to management's estimate b. Review and test management's process of developing the estimate c. Review subsequent events or transactions bearing on the estimate d. Send confirmations relating to the estimate

Send confirmations relating to the estimate

Auditor confirmation of accounts payable balances at the balance sheet date may be unnecessary because: a. This is a duplication of cutoff tests b. Accounts payable balances at the balance sheet date may not be paid before the audit is complete c. Correspondence with the audit client's attorney will reveal all legal action by vendors for nonpayment d. There is likely to be other reliable external evidence available to support the balances

There is likely to be other reliable external evidence available to support the balances

An audit of the balance in the accounts payable account is ordinarily not designed to: a. Detect accounts payable that are substantially past due b. Verify that accounts payable were properly authorized c. Ascertain the reasonableness of recorded liabilities d. Determine that all existing liabilities at the balance sheet date have been recorded

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 supporting documents. Which assertion would this test of controls most likely test? a. Completeness b. Existence c. Valuation d. Rights

Existence