AUDIT FINAL

The financial management of a company should take steps to see that company investment securities are protected. Which of the following is not a step that is designed to protect investment securities? a. Custody of securities should be assigned to persons who have the accounting responsibility for securities b. Securities should be properly controlled physically in order to prevent unauthorized usage c. Access to securities should be vested in more than one person d. Securities should be registered in the name of the company's chief executive officer

a. Custody of securities should be assigned to persons who have the accounting responsibility for securities

The auditors suspect that a client's cashier is misappropriating cash receipts for personal use by lapping customer checks received in the mail. In attempting to uncover this embezzlement scheme, the auditors most likely would compare the: a. Details of bank deposit slips with details of credits to customer accounts b. Daily cash summaries with the sums of the cash receipts journal entries c. Individual bank deposit slips with the details of the monthly bank statements d. Dates uncollectible accounts are authorized to be written off with the dates the write-offs are actually recorded

a. Details of bank deposit slips with details of credits to customer accounts

Which of the following procedures would the auditors most likely perform to test controls relating to management's assertion about the completeness of cash receipts for cash sales at a retail outlet? a. Observe the consistency of the employee's use of cash registers and tapes b. Inquire about employee's access to recorded but undeposited cash c. Trace deposits in the cash receipts journal to the cash balance in the general ledger d. Compare the cash balance in the general ledger with the bank confirmation request

a. Observe the consistency of the employee's use of cash registers and tapes

Which of the following is a procedure normally performed while completing the audit of a public company? a. Obtain a lawyer's letter b. Send out accounts receivable confirmations c. Observe the count of year-end inventory. d. Fill out the internal control questionnaire

a. Obtain a lawyer's letter

An auditor most likely would inspect loan agreements under which an entity's inventories are pledged to support management's financial statement assertion of: a. Presentation and disclosure b. Valuation or allocation c. Existence or occurrence d. Completeness

a. Presentation and disclosure

Reconciliation of the bank account should not be performed by an individual who also: a. Processes cash disbursements b. Has custody of securities c. Prepares the cash budget d. Reviews inventory reports

a. Processes cash disbursements

Which of the following is an effective control that encourages receiving department personnel to count and inspect all merchandise received? a. Quantities ordered are excluded from the receiving department copy of the purchase order b. Vouchers are prepared by accounts payable department personnel only after they match item counts on the receiving report with the purchase order c. Receiving department personnel are expected to match and reconcile the receiving report with the purchase order d. Internal auditors periodically examine, on a surprise basis, the receiving department copies of receiving reports

a. Quantities ordered are excluded from the receiving department copy of the purchase order

To determine that all sales have been recorded, the auditors would select a sample of transactions from the: a. Shipping documents file b. Sales journal c. Accounts receivable subsidiary ledger d. Remittance advances

a. Shipping documents file

Which of the following is not one of the auditors' primary objectives in an examination of investments in securities? a. To determine whether all securities are in proper, secure, files at year end b. To determine whether securities are the property of the client c. To determine whether securities actually exist d. to determine whether securities are properly classified on the balance sheet

a. To determine whether all securities are in proper, secure, files at year end

An auditor concluded that no excessive costs for an idle plant were charged to inventory. This conclusion is most likely related to presentation and disclosure and: a. Valuation b. Completeness c. Existence d. Rights

a. Valuation

When perpetual inventory records are maintained in quantities and in dollars, and internal control over inventory is weak, the auditor would probably: a. Want the client to schedule the physical inventory count at the end of the year b.Insist that the client perform physical counts of inventory items several times during the year c. Increase the extent of tests for unrecorded liabilities at the end of the year d. Have to disclaim on an opinion on the income statement for that year

a. Want the client to schedule the physical inventory count at the end of the year

Which of the following controls would most likely reduce the risk of diversion of customer receipts by a client's employees? a. A bank lockbox system b. Prenumbered remittance advances c. Monthly bank reconciliations d. Daily deposit of cash receipts

a. bank lockbox system

In order to efficiently establish the accuracy of the accounts payable cutoff, the auditors will be most likely to: a. coordinate cutoff tests with physical inventory observation b. compare cutoff reports with purchase orders c. compare vendors' invoices with vendors' statements d. coordinate mailing of confirmations with cutoff tests

a. coordinate cutoff tests with physical inventory observation

Which of the following audit procedures is the most appropriate when internal control over cash is weak or when a client requests an investigation of cash transactions? a. Proof of cash b. Bank reconciliation c. Cash confirmation d. Evaluation of ratio of cash to current liabilities

a. proof of cash

The auditor is examining electronic copies of sales invoices for the initials of the person responsible for approving credit sales. This is an example of a: a. Test of controls b. Substantive procedures c. Dual purpose test d. Test of balances

a. test of controls

Subsequent to the issuance of the auditor's report, the auditor became aware of facts existing at the report date that would have affected the report had the auditor then been aware of such facts. After determining that the information is reliable, the auditor should next a. Notify the board of directors that the auditor's report must no longer be associated with the financial statements b. Determine whether there are persons relying or likely to rely on the financial statements who would attach importance to the information c. Request that management disclose the effects of the newly discovered information by adding a footnote to subsequently issued financial statements d. Issue revised pro forma financial statements taking into consideration the newly discovered information

b. Determine whether there are persons relying or likely to rely on the financial statements who would attach importance to the information

The auditors' plan for the examination of long-term debt should include steps that require the: a. Verification of the existence of the bondholders b. Examination of copies of debt agreements c. Inspection of the accounts payable subsidiary ledger d. Investigation of credits to the bond interest income account

b. Examination of copies of debt agreements

The audit procedure of confirmation is least appropriate with respect to: a. The trustee of an issue of bonds payable b. Holders of common stock c. Holders of notes receivable d. Holders of notes payable

b. Holders of common stock

As compared to manual processing, electronic processing of cash transactions generally makes kiting: a. Easier to accomplish b. More difficult to accomplish c. Impossible to accomplish d. Neither easier nor more difficult to accomplish

b. More difficult to accomplish

Which of the following is the best audit procedure for the discovery of damaged merchandise in a client's ending inventory? a. Compare the physical quantities of slow-moving items with corresponding quantities in prior year b. Observe merchandise and raw materials during the client's physical inventory taking c. Review the management inventory representations letter for accuracy d. Test overall fairness of inventory values by comparing the company's turnover ratio with the industry average

b. Observe merchandise and raw materials during the client's physical inventory taking

Which of the following explanations most likely would satisfy an auditor who questions management about significant debits to the accumulated depreciation accounts? a. The estimated remaining useful lives of plant assets were revised upward b. Plant assets were retired during the year c. The prior year's depreciation expense was erroneously understated d. Overhead allocations were revised at year end

b. Plant assets were retired during the year

Internal control over cash receipts is weakened when an employee who receives customer mail receipts also: a. Prepares initial cash receipts records b. Records credits to individual accounts receivable c. Prepares bank deposits slips for all mail receipts d. Maintains a petty cash fund

b. Records credits to individual accounts receivable

Under which of the following circumstances would an auditor be most likely to intensify an examination of a $500 imprest petty cash fund? a. Reimbursement vouchers are not prenumbered b. Reimbursement occurs twice a week c. The custodian occasionally uses the cash fund to cash cash employee checks d. The custodian endorses reimbursement checks

b. Reimbursement occurs twice a week

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

b. Search for unrecorded liabilities

When confirming accounts payable, the approach is most likely to be one of: a. Selecting the accounts with the largest balances at year-end, plus a sample of other accounts. b. Selecting the accounts of companies with whom the client has previously done the most business, plus a sample of other accounts. c. Selecting a random sample of accounts payable at year-end. d. Confirming all accounts.

b. Selecting the accounts of companies with whom the client has previously done the most business, plus a sample of other accounts.

A transfer agent and a registrar are most likely to provide the auditor with evidence on: a. Restrictions on the payment of accounts payable b. Shares issued and outstanding c. Preferred stock liquidation value d. Transfers occurring between management and related parties

b. Shares issued and outstanding

An audit report for a public client indicates that the audit was performed in accordance with: a. Generally accepted auditing standards - GAAS - US b. Standards of the Public Company Accounting Oversight Board - US c. Generally accepted accounting principles (GAAP) - US d. Generally accepted accounting principles (GAAP) - Public Company Accounting Oversight Board (PCAOB)

b. Standards of the Public Company Accounting Oversight Board - US

The use of the positive (as opposed to the negative) form of receivables confirmation is indicated when: a. Control risk for accounts receivable is assessed as low b. There is reason to believe that a substantial number of accounts may be in dispute c. A large number of small balances are involved d. There is reason to believe a significant portion of the requests will be answered

b. There is reason to believe that a substantial number of accounts may be in dispute

Which of the following is correct concerning key audit matters? a. They relate to public company audit reports b. They are not included in audit reports with adverse opinions c. They are selected from matters communicated to those charged with governmental oversight d. They are required to be included for all years of financial statements presented

b. They are not included in audit reports with adverse opinions

Which of the following summarizes auditor reporting responsibility with respect to consistency? a. To give assurance that adequate disclosure will be made so that there will be comparability of financial statements between companies in the same industry. b. To give assurance that users will be informed of the lack of comparability of financial statements between periods due to changes in accounting principles c. To give assurance that the comparability of financial statements between periods has not been materially affected by any type of change d. To give assurance only that the same accounting principles have been applied to all similar transactions within each period presented.

b. To give assurance that users will be informed of the lack of comparability of financial statements between periods due to changes in accounting principles

In connection with the annual audit, which of the following is not a "subsequent events" procedure? a. Review available interim financial statements b. Read available minutes of meetings of stockholders, directors, and committees. With regard to meetings for which minutes are not available, inquire about matters dealt with at such meetings c. Make inquiries with respect to the financial statements covered by the auditors' previously issued report if new information has become available during the current examination that might affect that report d. Discuss with officers the current status of items in the financial statements that were accounted for on the basis of tentative, preliminary, or inconclusive data

c. Discuss with officers the current status of items in the financial statements that were accounted for on the basis of tentative, preliminary, or inconclusive data

Which of the following is an internal control weakness related to factory equipment? a. Checks issued in payment of purchases of equipment are not signed by the controller b. All purchases of factory equipment are required to be made by the department in need of the equipment c. Factory equipment replacements are generally made when estimated useful lives, as indicated in depreciation schedules have expired d. Proceeds from sales of fully depreciated equipment are credited to other income

c. Factory equipment replacements are generally made when estimated useful lives, as indicated in depreciation schedules have expired

An auditor accepted an engagement to audit the 20X8 financial statements of EFG Corporation and began the fieldwork on September 30, 20X8. EFG gave the auditor the 20X8 financial statements on January 17, 20X9. The auditor completed the audit on February 10, 20X9, and delivered the report on February 16, 20X9. The client's representation letter normally would be dated a. December 31, 20X8 b. January 17, 20X9 c. February 10, 20X9 d. February 16, 20X9

c. February 10, 20X9

An audit report for a public client indicates that the FINANCIAL STATEMENTS were prepared in conformity with: a. Generally accepted auditing standards - GAAS - US b. Standards of the Public Company Accounting Oversight Board - US c. Generally accepted accounting principles (GAAP) - US d. Generally accepted accounting principles (GAAP) - Public Company Accounting Oversight Board (PCAOB)

c. Generally accepted accounting principles (GAAP) - US

Which of the following would be the best protection for a company that wishes to prevent the "lapping" of trade accounts receivable? a. Segregate duties so that the bookkeeper in charge of the general ledger has no access to incoming mail b. Segregate duties so that no employee has access to both checks from customers and currency from daily cash receipts c. Have customers send payments directly to the company's depository bank d. Request that customers' payment checks be made payable to the company and addressed to the treasurer

c. Have customers send payments directly to the company's depository bank

Which of the following is the best way for the auditors to determine that every name on a company's payroll is that of a bona fide employee presently on the job? a. Examine human resources records for accuracy and completeness. b. Examine employees' names listed on payroll tax returns for agreement with payroll accounting records c. Make a surprise observation of the company's regular distribution of paychecks on a test basis d. Visit the working areas and verify that employees exist by examining their badge or identification numbers

c. Make a surprise observation of the company's regular distribution of paychecks on a test basis

For which of the following ledger accounts would the auditor be most likely to analyze the details? a. Postage expense b. Supplies expense c. Miscellaneous expense d. Salaries expense

c. Miscellaneous expense

The receiving department is least likely to be responsible for the: a. Determination of quantities of goods received b. Detection of damaged or defective merchandise c. Preparation of a shipping document d. Transmittal of goods received to the store's department

c. Preparation of a shipping document

Which of the following audit procedures is most effective in testing credit sales for understatement? a. Age accounts receivable b. Confirm accounts receivable c. Trace sample of initial sales slips through summaries to recorded general ledger sales d. Trace sample of recorded sales from ledger to initial sales slip

c. Trace sample of initial sales slips through summaries to recorded general ledger sales

To assure accountability for fixed-asset retirements, management should implement an internal control that includes: a. Continuous analysis of miscellaneous revenue to locate any cash proceeds from the sale of plant assets b. Period inquiry of plant executives by internal auditors as to whether any plant assets have been retired c. Utilization of serially numbered work orders d. Periodic observation of plant assets by the internal auditors

c. Utilization of serially numbered work orders

A material departure from generally accepted accounting principles will result in auditor consideration of: a. Whether to issue an adverse opinion rather than a disclaimer of opinion b. Whether to issue a disclaimer of opinion rather than a qualified opinion c. Whether to issue an adverse opinion rather than a qualified opinion d. Nothing, because none of these opinions is applicable to this type of exception

c. Whether to issue an adverse opinion rather than a qualified opinion

If a company employs a capital stock registrar and/or transfer agent, the registrar or agent, or both, should be requested to confirm directly to the auditors the number of shares of each class of stock: a. surrendered and canceled during the year. b. authorized at the balance sheet date c. issued and outstanding at the balance sheet date d. authorized, issued, and outstanding during the year

c. issued and outstanding at the balance sheet date

Which of the following is an effective control over accounts receivable? a. Only persons who handle cash receipts should be responsible for the preparation of documents that reduce accounts receivable balances b. Responsibility for approval of the write-off of uncollectible accounts receivable should be assigned to the cashier c. Balances in the subsidiary accounts receivable should be reconciled to the general ledger control account once a year, preferably at year end d. The billing function should be assigned to persons other then those responsible for maintaining accounts receivable subsidiary records

d. The billing function should be assigned to persons other then those responsible for maintaining accounts receivable subsidiary records

The primary responsibility of a bank acting as registrar of capital stock is to: a. Ascertain that dividends declared do not exceed the statutory amount allowable in the state of incorporation b. Account for stock certificates by comparing the total shares outstanding to the total in the shareholders' subsidiary ledger. c. Act as an independent third party between the board of directors and outside investors concerning mergers, acquisitions, and the sale of treasury stock d. Verify that stock is issued in accordance with the authorization of the board of directors and the articles of incorporation

d. Verify that stock is issued in accordance with the authorization of the board of directors and the articles of incorporation

In testing controls over cash disbursements, the auditors most likely would determine that the person who signs checks also: a. Reviews the monthly bank reconciliation b. Returns the checks to accounts payable c. Is denied access to the supporting documents d. Is responsible for mailing the checks

d. is responsible for mailing the checks

When auditing stockholders' equity accounts, the auditors determine whether there are restrictions on retained earnings resulting from loans or other causes. The primary audit objective of this procedure is normally to verify management's assertion of: a. existence or occurrence. b. Completeness. c. valuation or allocation d. presentation and disclosure

d. presentation and disclosure

Overall analysis of income statement accounts may identify errors, omissions, and inconsistencies not disclosed in the overall analysis of balance sheet accounts. The income statement analysis can best be accomplished by comparing monthly: a. income statement ratios to balance sheet ratios b. revenue and expense account balances to the monthly reported net income c. asset ratios to published industry averages d. revenue and expense account totals to the corresponding figures of the preceding years

d. revenue and expense account totals to the corresponding figures of the preceding years

CHAPTER ELEVEN

CHAPTER 11

CHAPTER 12

CHAPTER 12

CHAPTER 13

CHAPTER 13

CHAPTER 14

CHAPTER 14

CHAPTER 15

CHAPTER 15

CHAPTER 16

CHAPTER 16

The best way to verify the amounts of dividend revenue received during the year is: a. Recomputation b. Verification by reference to dividend record books c. Confirmation with dividend paying companies d. Examination of cash disbursements records

b. Verification by reference to dividend record books

Hall Company had large amounts of funds to invest on a temporary basis. The board of directors decided to purchase securities and derivatives and assigned the future purchase and sale decisions to a responsible financial executive. The best person or persons to make periodic reviews of the investment activity would be: a. An investment committee of the board of directors b. The chief operating officer c. The corporate controller d. The treasurer

a. An investment committee of the board of directors

Purchase cutoff procedures should be designed to test whether purchases recorded near year-end: a. Are owned by the company b. Are carrier at lower of cost or market on the year-end balance sheet c. On the year end balance sheet were paid for by the company d. Are in the possession of the company

a. Are owned by the company

McPherson Corporation does not make an annual physical count of year-end inventories, but instead makes weekly test counts on the basis of a statistical plan. During the year, Sara Mullins, CPA, observes such counts as she deems necessary and is able to satisfy herself as to the reliability of the client's procedures. In reporting on the results of her examination, Mullins: a. Can issue an unqualified opinion without disclosing that she did not observe year-end inventories b. Should comment in the scope paragraph as to her inability to observe year-end inventories, but can nevertheless issue an unqualified opinion c. Is required, if the inventories are material to disclaim an opinion on the financial statements taken as a whole d. Should, if the inventories are material, qualify her opinion

a. Can issue an unqualified opinion without disclosing that she did not observe year-end inventories

In an audit, the valuation of year-end accounts payable is most likely addressed by: a. Confirmation b. Examination of cash disbursements immediately prior to year-end. c. Examination of cash disbursements immediately subsequent to year-end. d. Analytical procedures applied to vouchers payable at year-end.

a. Confirmation

In the continuing audit of a manufacturing company of medium size, which of the following areas would you expect to require the least amount of audit time? a. Owners' equity b. Revenue c. Assets d. Liabilities

a. Owners' equity

A client has a calendar year-end. Listed below are four events that occurred after December 31. Which one of these subsequent events is most likely to result in adjustment of the December 31 financial statements? a. The client decided to change depreciation methods in the coming year b. A substantial portion of the company's inventory was written off as obsolete on January 31 b. The factory building was damaged by a fire on January 19. c. A major subsidiary was sold on February 7.

b. A substantial portion of the company's inventory was written off as obsolete on January 31

From the auditor's point of view, inventory counts are more acceptable prior to the year‑end when: a. Internal control is weak b. Accurate perpetual inventory are maintained c. Inventory is slow moving d. Significant amounts of inventory are held on a consignment basis

b. Accurate perpetual inventory are maintained

The auditors' report should be dated as of the date the a. Report is delivered to the client b. Auditors have accumulated sufficient appropriate evidence c. Fiscal period under audit ends d. Peer review of the working papers is completed

b. Auditors have accumulated sufficient appropriate evidence

Which of the following is a frequent control over cash disbursements? a. Checks should be signed by the controller and at least one other employee at the company b. Checks should be sequentially numbered and the numerical sequence should be accounted for by the person preparing bank reconciliations c. Checks and supporting documents should be marked "Paid" immediately after the check is returned with the bank statement d. Checks should be sent directly to the payee by the employee who prepares documents that authorize check preparation

b. Checks should be sequentially numbered and the numerical sequence should be accounted for by the person preparing bank reconciliations

Which assertion relating to sales is most directly addressed when the auditors compare a sample of shipping documents to related sales invoices? a. Existence of occurrence b. Completeness c. Rights and obligations d. Presentation and disclosure

b. Completeness

The auditors who are engaged to examine the financial statements of a business enterprise will request a cutoff bank statement primarily in order to: a. Verify the cash balance reported on the standard financial institution confirmation form b. Verify reconciling items on the client's bank reconciliation c. Detect lapping d. Detect kiting

b. Verify reconciling items on the client's bank reconciliation

The primary responsibility for the adequacy of disclosure in the financial statements of a publicly held company rests with the: a. partner assigned to the audit engagement b. management of the company c. auditor in charge of the field work d. Securities and Exchange Commission SEC

b. management of the company

To provide assurance that each voucher is submitted and paid only once, the auditors most likely would examine a sample of paid vouchers and determine whether each voucher is: a. Supported by a vendor invoice b. Stamped "paid" by the check signer c. Prenumbered and accounted for d. Approved for authorized purchases

b. stamped "paid" by the check signer

Contact with banks for the purpose of opening company bank accounts should normally be the responsibility of the corporate: a. Board of directors b. Treasurer c. Controller d. Executive committee

b. treasurer

The auditors who physically examine securities should insist that a client representative be present in order to: a. Detect fraudulent securities b. Lend authority to the auditor's directives c. Acknowledge the receipt of securities returned d. Coordinate the return of securities to the proper location

c. Acknowledge the receipt of securities returned

An auditor reconciles the total of the accounts receivable subsidiary ledger to the general ledger control account as of October 31, 20X0. By this procedure, the auditor would be most likely to learn which of the following? a. An October invoice was improperly computed b. An October check from a customer was posted in error to the account of another customer with a similar name c. An opening balance in a subsidiary ledger account was improperly carried forward from the previous account period d. An account balance is past due and should be written off

c. An opening balance in a subsidiary ledger account was improperly carried forward from the previous account period

You have been assigned to the year-end audit of a financial institution and are planning the timing of audit procedures relating to cash. You decide that it would be preferable to: a. Count the cash in advance of the balance sheet date in order to disclose any kitting operations at year end b. Coordinate the count of cash with the cutoff of accounts payable c. Coordinate the count of cash with the count of marketable securities d. Count the cash immediately upon the return of confirmation letters from the financial institution

c. Coordinate the count of cash with the count of marketable securities

Which of the following is most likely to be considered a Type 1 subsequent event? a. A business combination completed after year-end, but for which negotiations began prior to year-end. b. A strike subsequent to year-end due to employee complaints about working conditions that originated two years ago c. Customer checks deposited prior to year-end but determined to be uncollectible after year-end d. Introduction of a new line of products after year-end for which major research had been completed prior to year-end

c. Customer checks deposited prior to year-end but determined to be uncollectible after year-end

Chapter 17

chapter 17

The auditors are most likely to seek information from the plant manager with respect to the: a. Adequacy of the provision for uncollectible accounts b. Appropriateness of physical inventory observation procedures c. Existence of obsolete machinery d. Deferral of procurement of certain necessary insurance coverage

c. Existence of obsolete machinery

chapter 18

chapter 18

The auditors may conclude that depreciation charges are insufficient by noting: a. Insured values greatly in excess of book values b. Large amounts of fully depreciated assets c. Continuous trade-ins of relatively new assets d. Excessive recurring losses on assets retired

d. Excessive recurring losses on assets retired

To gather evidence regarding the balance per bank in a bank reconciliation, the auditors would examine any of the following except: a. Cutoff bank statement b. Year-end bank statement c. Bank confirmation d. General ledger

d. General ledger

The auditors have not been able to confirm a large account receivable, but they have satisfied themselves as to the proper amount of the receivable by means of alternative auditing procedures. The auditors' report on the financial statements should include: a. A description of the limitation on the scope of their audit and the alternative auditing procedures used, but an opinion qualification is not required b. An opinion qualification, but reference to the use of alternative auditing procedures is not required c. Both a scope qualification and an opinion qualification d. Neither a comment on the use of alternative auditing procedures nor an opinion qualification

d. Neither a comment on the use of alternative auditing procedures nor an opinion qualification

Which of the following accounts should be reviewed by the auditors to gain reasonable assurance that additions to property, plant, and equipment are not understated? a. Depreciation b. Accounts payable c. Cash d. Repairs

d. Repairs

In order to guard against the misappropriation of company-owned marketable securities, which of the following is the best course of action that can be taken by a company with a large portfolio of marketable securities? a. Require that one trustworthy and bonded employee be responsible for access to the safekeeping area where securities are kept b. Require that employees who enter and leave the safekeeping area sign and record in a log the exact reason for their access c. Require that employees involved in the safekeeping function maintain a subsidiary control ledger for securities on a current basis d. Require that the safekeeping function for securities be assigned to a bank or stockbroker that will act as a custodial agent

d. Require that the safekeeping function for securities be assigned to a bank or stockbroker that will act as a custodial agent

The least crucial element of internal control over cash is: a. Separation of cash record keeping from custody of cash b. Preparation of the monthly bank reconciliation c. Canceling the supporting documents for disbursements d. Separation of cash receipts form preparing deposits

d. Separation of cash receipts form preparing deposits

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 completed. 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.

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

A company holds bearer bonds as a short-term investment. Responsibility for custody of these bonds and submission of coupons for periodic interest collections probably should be delegated to the: a. Chief accountant b. Internal auditors c. Cashier d. Treasurer

d. Treasurer

An auditor most likely would analyze inventory turnover rates to obtain evidence about: a. Existence b. Rights c. Presentation d. Valuation

d. Valuation