accy 131 pre lecture #12, 13, 14

You are auditing a company that had $3 million in net sales last year. Their average total assets were $1 million and average fixed assets were $500,000. What is the company's fixed assets turnover ratio? Select answer from the options below 8 2 3 6

6= $3 million divided by $500,000 yields

Which of the following is considered a financing activity, except? Select answer from the options belowIssuing bonds Acquiring debt Acquiring equipment Issuing common stock

Acquiring equipment

While Audrey, the auditor, is performing tests for details of balances for the 10-year bond of Hernandez Corporation, he sent confirmation directly to the bank. All of the following would likely be included in his confirmation request, except? Select answer from the options belowCurrent status of the bondsBalance of the debtCurrent year's transactions Amortization schedule

Amortization schedule

Which of the following is an example of a kickback scheme? Select answer from the options below A government contractor's 5-year agreement will be extended to 10 years if costs remain 10% under budget. The CEO of the company hires the son of the chair of the board of directors to be an executive vice president. An employee steals $500 from account 66001, and takes $500 from a subsequent payment to cover up the theft. An employee pays a vendor $750 for a $550 purchase, and the employee receives $100 of the $200 overpayment.

An employee pays a vendor $750 for a $550 purchase, and the employee receives $100 of the $200 overpayment.

A CEO colludes with the head of the Department of Education to preferentially receive a lucrative contract, at 10% above the proposals of other vendors. The CEO pays $10,000 to the head of the Department for the arrangement. This is an example of which of the following?Select answer from the options below Kickback Lapping Stratification Bid rigging

Bid rigging

Who can sign the management representation letter of Naresh Textiles Incorporated? Select answer from the options below CEO and CFO CEO and ControllerSenior Accountant and CFOAccounting Staff and Board of Directors

CEO and CFO

Which of the following assertions is common to all purchasing transactions? Select answer from the options below Cutoff Obligation Completeness Existence

Completeness

Suppose an employee resubmits a vendor invoice for payment. The vendor is subsequently paid twice. The employee contacts the vendor for return of the payment and intercepts the returned payment for his or her personal purposes. This is an example of which of the following? Select answer from the options below Kickback Fictitious invoice Phantom vendor Duplicate payment

Duplicate payment

Auditor concerns about potential consignment traits of inventory represent a significant potential risk of misstatement for which of the following industries? Select answer from the options below Supermarkets and Grocery Stores Hotels and Motels Electronic Computer Manufacturing Oil and Gas Field Machinery

Electronic Computer Manufacturing

The auditors of Hansen Plastics, Inc. are performing initial substantive procedures for shareholder's equity. Which assertion is being tested with the following procedure: "Trace beginning balance for stockholders' equity accounts to last year's working papers"? Select answer from the options below Existence and Completeness Rights and ObligationsAccuracyValuation

Existence and Completeness

Auditor concerns about potential unrecorded liabilities represent a significant potential risk of misstatement for all of the following industries, EXCEPTSelect answer from the options below Oil and Gas Field Machinery and Equipment Manufacturing. Supermarkets and Grocery Stores. Electronic Computer Manufacturing. Hotels and Motels.

Hotels and Motels.

An entity's procurement process includes all of the following, EXCEPT Select answer from the options below Establishing payment terms and negotiating contracts. Purchasing and receiving goods. 7Selecting vendors. Identifying key customers.

Identifying key customers.

Which of the following actions can be taken if inventory is not recorded?Select answer from the options below Offer sales discounts. Investigate bank solution. Write off bad debts. Investigate negative balances in inventory records.

Investigate negative balances in inventory records.

An employee receives 25% of the overpayment of $620 for a purchase that is ordinarily $320. This is an example of which of the following?Select answer from the options below Stratification Lapping Bid rigging Kickback

Kickback

What type of fraud has occurred if an employee authorizes purchases of products at inflated prices or inferior quality from a vendor in return for personal payments from that vendor? Select answer from the options belowBid rigging KickbackPhantom vendorFictitious invoice

Kickback

Which of the following entities is likely to have the highest risk of misstatement due to a large number of vendors? Select answer from the options below Sunshine Hotels and Suites Larimer County Oil and Gas Pipe Supply Excel Charter Schools of Arizona Phoenix Custom Computer Manufacturing

Larimer County Oil and Gas Pipe Supply

When an auditor finds that a client has engaged in which of the following types of transactions, the auditor should be prepared to study a significant volume of legal documents related to the financing transaction? Select answer from the options below Old stock issue Significant credit Matured bond Significant new bond issue

Matured bond

Vendor #8569 has a debit transaction on its account. Which of the following supporting documents can be used to vouch for the debit entry on the accounts payable account? Select answer from the options below Paid checks Vendor invoice Purchase order Receiving report

Paid checks

An auditor suspects that not all purchasing transactions have been recorded. Which of the following calculations will be most helpful for testing this suspicion? Select answer from the options below Cost of goods sold to average accounts payable Current ratio Payables as a percentage of total assets Accounts payable turnover in days

Payables as a percentage of total assets

A major company has going-concern problems. If the CFO is suspected of having artificially inflated reported earnings at the end of the year, which of the following may he or she have done? Select answer from the options below Engaged in lapping using accounts with high payables. Engaged in bid rigging with a major vendor. Charged personal purchases to a phantom vendor. Recorded material purchase returns at the end of the year.

Recorded material purchase returns at the end of the year.

Alonzo Grant has identified the flow of transactions for Supreme Fabrics Emporium. Which of the following actions is NOT necessary for Alonzo to perform when he audits the company's purchase process? Select answer from the options below Identifying the key controls to test Identifying potential controls placed by managementEvaluating what can potentially go wrong in the process Reporting inadequate controls over receivables to management

Reporting inadequate controls over receivables to management

During the audit of Chan Products, the auditor identified that the hurricane that hit the client's plant disrupted operations. Which audit procedure performed has identified this going concern issue? Select answer from the options belowAnalytical procedures during risk assessmentReading of minutes of meetings with stockholders and board of directors Review of subsequent events Review of compliance with terms of debt

Review of subsequent events

Which of the following entities has the highest risk of misstatement regarding purchases that are of moderate importance? Select answer from the options below Highland Drilling Pipes Garland Computer Repair Seattle Health Foods Richland Budget Motel

Richland Budget Motel

During the audit of Schmidt's Equipment Co., the auditor discovered that some vendors on the master list are obsolete, and the client has not bought from them for a year. Which of the following risk arises from not removing old vendors from the list? Select answer from the options below Risk of erroneous payment. Risk of unauthorized payment. Risk of outdated vendor information. Risk of duplicate payment.

Risk of erroneous payment.

As he prepares for his next audit assignment, Henry is anticipating a strong likelihood of identifying misstatements due to potential unrecorded liabilities. Which of the following is LEAST likely to be Henry's next audit engagement? Select answer from the options below Silicon Device Solutions Ltd. Value Deluxe Groceries Riviera Sands Luxury Hotels Deep Well Oil Exploration Tools, Inc.

Riviera Sands Luxury Hotels

Which of the following practices related to purchases is NOT likely to lower inherent risk? Select answer from the options below Significant purchase transactions with affiliated companies. Lack of legal restrictions related to purchases. Close client monitoring of purchases. Strong corporate governance and oversight of purchasing and accounts payable.

Significant purchase transactions with affiliated companies.

In auditing accounts payable, an auditor's procedures most likely would focus primarily on management's assertion of: rights and obligations. completeness. valuation and allocation. existence.

completeness.

Tests designed to detect purchases made before the end of the year that have been recorded in the subsequent year most likely would provide assurance about management's assertion of: accuracy. cutoff. occurrence. classification.

cutoff.

Been There Worn That is a used clothing store that sells some of its inventory on a consignment basis from a consignor. All of the following are true about BTWT's consignment inventory EXCEPT Select answer from the options below it should be segregated from other inventory. it is owned by the consignor. it should be counted separately. it should be included in the final inventory count.

it should be included in the final inventory count.

In auditing accounts receivable, the negative form of confirmation request most likely would be used when: the auditor performs a dual purpose test that assesses control risk and obtains substantive evidence. recipients are likely to return positive confirmation requests without verifying the accuracy of the information. a small number of accounts receivable are involved but a relatively large number of errors are expected. the combined assessed level of inherent and control risk relative to accounts receivable is low.

the combined assessed level of inherent and control risk relative to accounts receivable is low.

To effectively understand an entity's purchases cycle, an auditor should be knowledgeable about how purchases support the earnings generation of the entity.

true

Linhua Enterprise has a $200,000 inventory balance from last year and purchased $350,000 this year. They sold $385,000 of the inventory in the current year. What is the inventory balance at the end of the year? Select answer from the options below $585,000 $165,000 $175,000 $200,000

$200,000 + $350,000 - $385,000 = $165,000

At the end of the fiscal year, a company's current assets are $60,000 and current liabilities are $600,000. What is its current ratio? Select answer from the options below 0.1 10 100 1

$60,000 / $600,000 = 0.1.

At the end of the fiscal year, a business's accounts payable turnover in days is 3.0, and the average accounts payable is $600. What is its cost of sales? Select answer from the options below $85,000 $657,000 $493,000 $73,000

(1 / 3.0) x 365 x $600 = $73,000.

You are auditing a company and conduct a free cash flow ratio, which comes to a total of -$300,000. What does this indicate to you?Select answer from the options below The company uses debt financing to expand its assets and earnings.The company needs expected financing, so it doesn't draw down on cash.The company has potential liquidity problems.The company generates a higher rate of return on assets than its incremental cost of debt. Save for Later Submit Answer

.The company has potential liquidity problems

At the end of the fiscal year, the cost of sales is $10,000 and the average accounts payable is $520. What is the accounts payable turnover in days? Select answer from the options below 7 19 33 25

365 days / ($10,000 / $520)= 19

You are auditing a company and see that its income before interest and income taxes is $2 million. Its interest expense is $200,000 and its capitalized interest is $150,000. What is the company's times interest earned ratio? Select answer from the options below 40 10 5.7 .175

5.7 $2 million divided by $350,000 equals 5.7.

Which of the following situations regarding transfer checks most strongly indicates that kiting is occurring?Select answer from the options below A check is recorded as being deposited in early March, and then is never recorded as being disbursed.A check is recorded as being deposited in mid-April, and being disbursed a few days later.A check is recorded as being received in early May, but was disbursed in late April. A check is recorded as being disbursed at the beginning of March, and received in late February. Save for Later Submit Answer

A check is recorded as being disbursed at the beginning of March, and received in late February.

Which of the following companies has the lowest inherent risk in month-end closing procedures, in relation to purchases?Select answer from the options below A company confirms that local regulations do not restrict power usage in the summer months. The company board begins close oversight of the purchasing process, starting in January. At the end of January, a Canadian company checks that summer clothing has not been sold extensively that month. A company carefully checks that April transactions were not recorded as having occurred in May.

A company carefully checks that April transactions were not recorded as having occurred in May.

Which of the following definitions is related to verifying the occurrence of purchases? A computer starts with the population of daily vouchers and compares quantities with the underlying receiving report, compares prices to the underlying purchase order, and checks the mathematical accuracy of the voucher. A computer starts with the population of daily receiving reports and develops a one for one match with vouchers to ensure that each receiving report results in a voucher (the recording of a p

A computer starts with the population of daily receiving reports and develops a one for one match with vouchers to ensure that each receiving report results in a voucher (the recording of a payable).

Which of the following is an example of bid rigging? Select answer from the options below An art dealer sets an auction to start at $70,000 to maximize earnings. A government contractor consistently overstates its total costs by 10%. A construction company pays $10,000 to a government employee to preferentially receive a highway contract. A restaurant manager pays $500 to a county health inspector to overlook serious food handling violations.

A construction company pays $10,000 to a government employee to preferentially receive a highway contract.

An audit is being conducted on a company and the auditor decides to follow a primarily substantive approach after understanding its controls. Which of the following companies is the auditor most likely auditing? Select answer from the options below A privately owned hotel chain planning a large expansion. A state university that is largely funded by the state government. A small, privately owned clothing store with one location .A public company with over 1,000 employees.

A small, privately owned clothing store with one location

Previous purchases of raw materials inventory on credit were paid cash of $50,000 less of purchase discounts. Which of the following accounts is debited for the payment transaction? Select answer from the options belowPurchase Discounts Raw Materials Inventory Cash Accounts Payable

Accounts Payable

Developing a knowledgeable perspective about an entity's financial statements is likely to include an understanding of all of the following, EXCEPT Select answer from the options below Accounts receivable turnover. Quick ratio. Accounts payable as percent of total assets. Current ratio.

Accounts receivable turnover.

During the audit of the payroll process of Agarwal Media Company, the auditor is looking at the electronic time records and discovered that an hourly employee was paid $20/hr when the actual wage was only $18/hr. This is a weakness in control relating to which assertion? Select answer from the options below Accuracy CompletenessClassification of Expenses and PayrollCutoff Save for Later Submit Answer

Accuracy

Which of the following is an example of a credit purchase by a national furniture chain? Select answer from the options below Returning 25 crates of pillows to the distributor Offering a 15% reduction in payment allowed for defective mattresses Offering a $300 discount for a late shipment of lamps Acquiring company land holdings in Montana

Acquiring company land holdings in Montana

Which of the following is true regarding inherent risk in the financing cycle? Select answer from the options belowAuditors often believe that inherent risk in the financing cycle is moderate to high.Proper accounting.Issues related to financial statement. Auditors often believe that inherent risk in the financing cycle is moderate to low

Auditors often believe that inherent risk in the financing cycle is moderate to low

Yue Yap is auditing interest transactions on her client's notes payable. Which of the following documents would show evidence of the existence of interest expense? Select answer from the options below Notes certificate Vouchers Canceled checks Bank confirmation

Bank confirmation

An owner of the advertising firm has a close friend working as the top manager in the mobile company. As a result, of the friend's assistance, the advertising firm was able to win the bidding contract for the exclusive advertisement of the new mobile phone design. In return, the friend was compensated in cash for his help. What type of violation just occurred? Select answer from the options below Fictitious vendors Personal purchases Kickbacks Bid-rigging

Bid-rigging

_ include cash in the bank, such as a primary bank of the country. Select answer from the options below Cash only Transaction classes Cash and cash equivalents Disclosures

Cash and cash equivalents

Which of the following formulas is used to find out the ratio of dividend payout rate?Select answer from the options below Cash dividends divided by net income Average total assets minus total dividendsCash dividends times net incomeCash dividends minus net income Save for Later Submit Answer

Cash dividends divided by net income

Reconciling the date, the inventory, and accounts payable are recorded to the date the goods are received, that they are in the same accounting period, relates to which of the following assertion? Select answer from the options below Accuracy Existence Completeness Cutoff

Cutoff

All of the following assertions apply to disclosures for payables, assets, and expenditures EXCEPT Select answer from the options below Cutoff. Occurrence and rights and obligations. Accuracy and Valuation.Completeness.

Cutoff.

When performing analytical procedures, an auditor notices inventory days slowing from 34 to 45 days and gross margin increasing from 39 to 48%. Which of the following assertions might be misstated? Select answer from the options below Occurrence and existence Occurrence, valuation, and accuracy Existence, valuation, and cutoff Existence and accuracy

Existence, valuation, and cutoff

The client purchased an inventory FOB shipping point on December 31, 2025. The goods arrived at the client's warehouse on January 2, 2026. On the client's books on December 31, 2025, what should be the correct treatment of the goods purchased? Select answer from the options below Goods are included in the inventory and accounts payable. Goods are included in inventory but excluded in accounts payable. Goods are excluded in the inventory account but included in accounts payable as a liability.' Goods are excluded in the inventory account and account payable.

Goods are included in the inventory and accounts payable.

In order to understand an entity's purchases cycle, the auditor should be knowledgeable about all of the following, EXCEPT Select answer from the options below How purchases support the earnings generation of the entity.The entity. Identities of suppliers. Types of purchases the entity makes.

Identities of suppliers.

Abadi Tie Products received products returned from its customers. Which of the following controls would reduce the risk of misstatements on the returned goods? Select answer from the options below Independent count of return goods recorded on packing slips and bill of lading. Credit memo with authorization for purchase returns. Purchase orders accompanying the returned goods. Purchase returns authorized by the customer.

Independent count of return goods recorded on packing slips and bill of lading.

As part of the auditor's responsibilities with respect to evaluating whether an entity is a going concern, the auditor will evaluate the entity's ability to generate sufficient cash flow to meet commitments regarding which of the following? Select answer from the options below Debt management Interest expenses Interest paid Debt conversion

Interest expenses

What is a main difference between companies in the electronic computer manufacturing industry and universities/professional schools?Select answer from the options below Inventory is very material to financial statements for electronic computer manufacturing, whereas inventory is usually insignificant for universities. The inventory turnover rates are about the same for both electronic computer manufacturing and for universities, but inventory makes up a higher percentage of total assets for universities.Electronic computer manufacturing has a median inventory turnover of about two months, whereas universities have a median inventory turnover of about four months.Electronic computer manufacturing has a moderate inventory turnover, whereas universities have a high inventory turnover. Save for Later Submit Answer

Inventory is very material to financial statements for electronic computer manufacturing, whereas inventory is usually insignificant for universities.

In which of the following is fraud risk in the purchasing process inherently lower than the others?Select answer from the options below Local housing advocacy group National private bank State government County parks department

National private bank

Substantive tests on presentation and disclosure to determine the appropriateness of disclosures concerning all terms, covenants, and retirement provisions pertaining to long-term debt test for which of the following assertions? Select answer from the options below Occurrence, accuracy and valuation, and rights and obligations only. Occurrence, rights and obligations, and classification only. Classification and understandability only. Occurrence and rights and obligations only.

Occurrence, accuracy and valuation, and rights and obligations only.

Vouching of entries to long-term debt accounts and underlying documentation provides evidence for which of the following assertions? Select answer from the options below Occurrence and valuation only. Occurrence, existence, accuracy and valuation, cutoff, and classification. Existence, accuracy, valuation, and classification only.Completeness, accuracy and valuation, and cutoff only.

Occurrence, existence, accuracy and valuation, cutoff, and classification.

Comparing selected items from the payroll register to employee time records that have been approved by supervisory personnel tests which of the following assertions for payroll expense? Completeness. Cutoff. Authorization. Occurrence.

Occurrence.

Which of the following is an example of a purchase adjustment by a bicycle manufacturing company? Select answer from the options below Expanding the company's large-scale production capacity by purchasing new technology Increasing the company's intellectual property holdings by acquisition Increasing the organization's total shelf stock of beach cruiser and racing bicycles Offering a $500 reduction in payment allowed for defective components

Offering a $500 reduction in payment allowed for defective components

As defined by AU-C 570, which of the following exemplifies a reasonable period of time for a public company worth $25 million?Select answer from the options below One year after the April 1 financial filing. Twenty-four hours after receiving client payment.One week after issuing an invoice.Three months after a bad-debt write-off. Save for Later Submit Answer

One year after the April 1 financial filing.

To conduct an effective audit of the Long Wharf seafood processing company, the audit team at Myers & Chang must have a thorough understanding of the entity. Which of the following would likely NOT be a suitable information source for the team working on the Long Wharf audit? Select answer from the options below Reports from trade associations. Publishers of industry information. Online articles and blog posts. Previous experience with the entity.

Online articles and blog posts.

For an audit of the purchasing process of a chemicals manufacturer, it is particularly important for the auditor to be knowledgeable about all of the following, except?Select answer from the options below The effect of waste disposal services on company profit Local regulations on safe storage of compressed gases Other industrial manufacturers in the area Raw materials purchased by the company

Other industrial manufacturers in the area

An auditor determines that a vendor charged $15,000 for a shipment of computers. The auditor next determines that the vendor's mailing address is 8045 Southside Street, the home address of the company COO. The auditor should suspect the occurrence of which of the following? Select answer from the options below Phantom vendor Lapping Kickback Bid rigging

Phantom vendor

An auditor determines that vendor number 6678 on the voucher is matched with vendor number 6687 on the purchase order. The auditor should test for which of the following? Select answer from the options below Unrecorded purchase. Posted voucher to incorrect account. Unauthorized purchaser. Posted payment to incorrect seller.

Posted payment to incorrect seller.

An auditor determines that account number 003453-5S is on the voucher, whereas on the purchase requisition and purchase order, the account number reads as 34535S. The auditor should test for which of the following?Select answer from the options below Posted voucher to incorrect account. Failure to receive an ordered good.Posted payable to incorrect vendor.Purchase from unauthorized vendor.

Posted voucher to incorrect account.

To begin her audit of the purchase process for Mantello's Coffee Cafes, Darby first needs to identify the company's core purchase transactions. Which of the following will Darby NOT review at this stage in her audit process? Select answer from the options below Purchasing goods and services Making payments Making purchase adjustments Processing account transactions

Processing account transactions

Kickbacks and bid rigging are risks categorized under which of the following fraud risks? Select answer from the options below Payment Account Procurement Purchase returns

Procurement

_ misstatements are the result of audit sampling. Select answer from the options below Factual Material Projected Judgmental

Projected

Which of the following is an example of a key purchasing process assertion for the purchase of materials or goods? Select answer from the options below The distributor has sole liability for shipping safety. Purchase transactions are recorded in the proper account. Employees receive 25% of the company's profits. Historically, raw materials have been 25% of product costs.

Purchase transactions are recorded in the proper account.

A company determines that its receipt of five canisters of compressed gas is not mentioned in the corresponding purchase order. There is a risk of which the following? Select answer from the options below Receipt of unordered goods. Duplicate payment. Unauthorized purchaser. Unrecorded purchase.

Receipt of unordered goods.

Vouching and tracing to obtain evidence about the processing of payroll transactions are examples of which of the following?Select answer from the options belowTest of detail of balancesAudit data analyticsSubstantive analytical procedures Tests of details of transactions Save for Later Submit Answer

Tests of details of transactions

Which of the following companies has the highest inherent risk in corporate governance, in relation to purchases? Select answer from the options below The company board trusts management to buy supplies only when needed. A government contractor is mandated to purchase U.S. products whenever possible.Senior management of a company interacts closely with competitors in the industry. State government imposes few waste disposal restrictions on a company.

The company board trusts management to buy supplies only when needed.

In determining the adequacy of the allowance for uncollectible accounts, the least reliance should be placed upon which of the following? Subsequent year collections of amounts in accounts receivable at the balance sheet date. Ratios calculated showing the past relationship of the valuation allowance to net credit sales. An aging schedule of past due accounts. The credit manager's opinion.

The credit manager's opinion.

Given that the auditor understands the entity's investing activities and the nature of the business, which of the following should be predictable?Select answer from the options below The entity's cash flows.The entity's operating activities.The entity's operating income. The entity's financing activities. Save for Later Submit Answer

The entity's financing activities.

Often a direct connection exists between a client's investment in property, plant and equipment (or other long-term assets), and which of the following? Select answer from the options below The entity's financial ledger. The entity's financing activities. The entity's financial statements.The entity's operating activities.

The entity's financing activities.

What would happen if an external auditor was performing an audit of a larger public company with an internal auditor who tested controls over cash and cash budgeting? Select answer from the options below The external auditor would defer a large portion of control to the internal auditor. The external auditor would assume there are weak internal controls over cash.The external auditor would decide whether to use the internal auditor's work to support their conclusion. The external auditor would not factor the internal auditor's work into the audit conclusion.

The external auditor would decide whether to use the internal auditor's work to support their conclusion.

Which of the following is the best argument against the use of negative accounts receivable confirmations? There is no way of knowing if the intended recipients received them. The cost-per-response is excessively high. Recipients are likely to feel that, in reality, the confirmation is a subtle request for payment. The inference drawn from receiving no reply may not be correct.

The inference drawn from receiving no reply may not be correct.

You are auditing a warehouse. During the inspection of assets, you notice that some items that had been determined as expenditures the year before are now being counted as capital items. What does this indicate? Select answer from the options below The warehouse is not maintaining consistency when recording repairs and maintenance expenses. The warehouse's growth may have caused a change in consistency reporting. The warehouse is not maintaining propriety when recording repairs and maintenance expenses. The warehouse's growth may have caused a change in propriety reporting.

The warehouse is not maintaining consistency when recording repairs and maintenance expenses.

You are auditing a wholesale supplier for grocery stores. Why is it important for you to become familiar with industry standards in the initial procedures stage? Select answer from the options belowT o gain knowledge about whether the wholesaler has accounting records that match industry standards. To be able to more fully understand how the wholesaler uses cash receipts and transactions with the bond trustee. To better understand if the wholesaler is using debt and equity financing in a way that is similar to those standards. To better advise the wholesaler about how it can best predict key economic events and leverage those events.

To better understand if the wholesaler is using debt and equity financing in a way that is similar to those standards.

The auditors of Hansen Plastics, Inc. are performing initial substantive procedures for stockholders' equity. Which assertion is being tested with the procedure of reviewing activity in stockholders' equity accounts and investigating entries that appear unusual in amount or source? Select answer from the options below Existence and cutoff Completeness and existence Occurrence and rights and obligations

Valuation and allocation

All of the following are analytical procedures used to audit purchases, EXCEPT Select answer from the options below accounts receivable turnover days. cost of goods sold to accounts payable ratio. current ratio. payables as a percentage of total assets.

accounts receivable turnover days.

During substantive tests over a company's purchasing process, the auditor calculates accounts payable turnover in days and compares the result to prior years and industry data. This is an example of Select answer from the options below initial procedures. analytical procedures. tests of details of presentation and disclosure. tests of details of transactions.

analytical procedures.

Tracing copies of sales invoices to shipping documents will provide evidence that all: shipments to customers were billed. accounts receivable ledger is complete. billed sales were shipped. shipments to customers were recorded as receivables.

billed sales were shipped.

Bob Lambert is auditing the purchase process for Smart, Inc, which relies on computer controls. If he plans to assess control risk as low for purchase process assertions, Bob will likely do all of the following EXCEPTSelect answer from the options below use computer-assisted auditing techniques to evaluate the effectiveness of programmed application controls. test the effectiveness of general controls. decide not to test controls over purchases. test the effectiveness of manual procedures to follow-up on exceptions identified by application controls. Save for Later Submit Answer

decide not to test controls over purchases.

The existence assertion for accounts payable includes: determining whether all accounts payable are recorded in the proper period. determining whether all accounts payable are recorded. determining whether all accounts payable are properly classified in the financial statements. determining whether all accounts payable actually are liabilities.

determining whether all accounts payable actually are liabilities.

Which of the following does NOT involve collusion between an employee and a vendor? Select answer from the options below inflated transactions with vendors duplicate payments bid rigging kickbacks

duplicate payments

An auditor vouched data for a sample of employees in a payroll register to approved clock card/time sheet data to provide assurance that: payments to employees are computed at authorized rates. internal controls relating to unclaimed payroll checks are operating effectively. segregation of duties exists between the preparation and distribution of the payroll. employees worked the number of hours for which they are paid.

employees worked the number of hours for which they are paid.

strong corporate governance and oversight of the purchasing, and procurement process.

false

An invoice submitted by an employee for services not received by the entity would be classified asSelect answer from the options below duplicate. fictitious. rigged. phantom.

fictitious.

f completeness is a concern for accounts payable, auditors will send accounts payable confirmations to: a random sample of all vendors. primarily vendors with small or zero accounts payable balances. all vendors. primarily vendors with large accounts payable balances.

primarily vendors with small or zero accounts payable balances.

All of the following are core purchases transactions EXCEPT Select answer from the options below purchases reversals. purchasing goods and services. purchase adjustments. making payments.

purchases reversals.

Which of the following is NOT capable of reducing procurement fraud risks? Select answer from the options below ensuring support for payments before recording a liability. access controls that limit the ability to setup new vendors. strong controls over customer master files. willingness to dispute questionable items with vendors.

strong controls over customer master files.

All of the following factors related to purchases are likely to result in higher inherent risks, EXCEPT Select answer from the options below strong corporate governance and oversight of the purchasing, and procurement process. significant purchase transactions with affiliated companies, and other related parties.payables recorded when vendor invoices are received. "Buy America" laws.

strong corporate governance and oversight of the purchasing, and procurement process.

All of the following are true about audit data analytics, EXCEPTSelect answer from the options belowthey can calculate the number of inventory turnover in days for each SKU number .they may be helpful assessing whether inventory may be misstated. they may be used to evaluate space needed to store inventory. they are not accurate in evaluating the lower of cost or net realizable value.

they are not accurate in evaluating the lower of cost or net realizable value.