[ACAUD 3250] Prelims
The auditor should analyze the income tax payable account and vouch all accounts to income tax returns, paid checks, or other supporting documents. [T/F]
TRUE
Voucher is a pre-numbered document used by most companies to record and control the acquisition of goods. [T/F]
TRUE
Accounts payable is usually considered moderate-risk item in the FS audit. [T/F]
FALSE
Accounts receivable originally from credit sales with credit balance is not classified as current liability. [T/F]
FALSE
An auditor usually examines receiving reports to support entries in the voucher register. [T/F]
FALSE
Purchase order is a document used by the employee to request goods and services. [T/F]
FALSE
Purchase orders are issued by the vendor. [T/F]
FALSE
When the warranty is a service-type warranty, it should be accounted for using PFRS 16. [T/F]
FALSE
An auditor's purpose in reviewing the renewal of a note payable shortly after the balance sheet date most likely is to obtain evidence concerning management's assertion about presentation and disclosure. [T/F]
TRUE
Examination of any contracts or other documents on band that provide the basis for the accrual is one of the basic steps in the audit of accrued liabilities. [T/F]
TRUE
In premium liability, the total proceeds from sales is allocated between the main product and the premium using the sales value of main product and the sales value of the estimated premiums expected to redeem. [T/F]
TRUE
In the audit of unclaimed salaries and wages, the auditor should analyze that the credits represent all unclaimed wages after each payroll distribution. [T/F]
TRUE
In the audit of unclaimed salaries and wages, the auditor should verify disposition of the account subsequent to the statement of financial position. [T/F]
TRUE
Management tends to understate liabilities in their reports. [T/F]
TRUE
Notes payable to officers, due on demand, is classified as current liability. [T/F]
TRUE
Reading the minutes of BOD meeting can detect an unrecorded liability. [T/F]
TRUE
Which of the following is least likely to be an approach followed when auditing the fair values of assets and liabilities? a. Review and test management's process of valuation b. Confirm valuations with audit committee members c. Independently develop an estimate of the value of the account d. Review subsequent events relating to the account
[UNSURE[
An examination of the balance in accounts payable account is ordinarily designed to verify that the accounts payable were properly authorized. [T/F]
[UNSURE]
Analytical procedures for current liabilities include comparing supplier balances post year-end to those at year-end and investigate unusual or significant changes. [T/F]
[UNSURE]
Auditor confirmation of accounts payable balances at the balance sheet date may be unnecessary because a. This is a duplication of cutoff test 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 vendor for nonpayment d. There is likely to be other reliable external evidence to support the balances.
[UNSURE]
The procedures performed to test payroll liability include observing, on a surprise bases, the distribution of payroll checks to employees. [T/F]
[UNSURE]
The provision for estimated liability based on historical experience of the level of volumes, product mix and repair, and replacement cost. [T/F]
[UNSURE]
The auditor tests this assertion to ensure that all payables and their transactions occurred during the year have been recorded. a. Completeness b. Valuation c. Existence d. Rights
a. Completeness
Which of the following audit procedures is least likely to detect an unrecorded liability? a. Analysis and recomputation of interest expense b. Analysis and recomputation of depreciation expense c. Mailing of standard bank confirmation form d. Reading of the minutes of meetings of the board of directors
b. Analysis and recomputation of depreciation expense
Which of the following would detect an understatement of purchase discount? a. Verify footings and crossfootings of purchase and disbursement records. b. Compare purchase invoice terms with disbursement records and checks. c. Compare approved purchase orders to receiving reports. d. Verify the receipts of items ordered and invoiced.
b. Compare purchase invoice terms with disbursement records and checks.
Which of the following is a primary function of the purchasing department? a. Authorizing the acquisition of goods b. Ensuring the acquisition of goods of a specified quality c. Verifying the propriety of goods of a specified quality d. Reducing expenditures for goods acquired
b. Ensuring the acquisition of goods of a specified quality
Matching the supplier's invoice, the purchase, and the receiving report normally should be the responsibility of the a. Receiving department b. Purchasing department c. Accounting function d. Treasury function
c. Accounting function
When an auditor selects a sample of items from the vouchers payable register for the last month of the period under audit and traces these items to underlying documents, the auditor is gathering evidence primarily in support of the assertion that: a. Recorded obligations were paid b. Incurred obligations were recorded in the correct period c. Recorded obligations were valid d. Cash disbursements were recorded as incurred obligations
c. Recorded obligations were valid
The following are affected by the efficiency and effectiveness of accounts payable process, except: a. Cash Position b. Credit Rating c. Relationship with auditors d. Relationships with suppliers
c. Relationship with auditors
Which of the following is the best audit procedure for determining the existence of unrecorded liabilities? a. Examination of confirmation requests returned by creditors whose accounts appear on a subsidiary trial balance of accounts payable b. Examine unusual relationship 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 a sample of cash disbursement in the period subsequent to year-end
d. Examine a sample of cash disbursement in the period subsequent to year-end
