Audit Chapter 14

Ace your homework & exams now with Quizwiz!

debited

As repairs on warranty items take place, the accrual account is ________.

Accrued liabilities generally differ from accounts payable in that accrued liabilities: a. Are often based on estimates. b. Are usually confirmed at year-end. c. Depend upon the existence of a transaction for original recording of the account. d. Are never included in cost of goods sold.

a. Are often based on estimates.

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

a. Completeness.

The assertion most directly addressed when performing the search for unrecorded liabilities is: a. Completeness. b. Existence. c. Presentation. d. Rights.

a. Completeness.

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.

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.

a. Detect accounts payable that are substantially past due.

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

a. Receiving report and the purchase order.

Which of the following is the best control procedure to prevent the payment of an invoice twice? a. Review of supporting documentation by the person signing the check. b. Requiring dual signatures on checks. c. Use of a check protector. d. Reconciliation of vendor statements to accounts payable.

a. Review of supporting documentation by the person signing the check.

Which of the following best describes the auditors' approach to the audit of accrued liabilities? a. Test computations. b. Confirmation. c. Observation. d. A low planned assessed level of control risk.

a. Test computations.

Unrecorded liabilities are most likely to be found during the review of which of the following documents? a. Unpaid bills b. Shipping records c. Bills of lading d. Unmatched sales invoices

a. Unpaid bills

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 a cash confirmation form. d. Reading of the minutes of meetings of the board of directors.

b. Analysis and recomputation of depreciation expense.

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? a. Completeness. b. Existence. c. Valuation. d. Rights.

b. Existence.

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.

b. Reconciling vendors' monthly statements with subsidiary payable ledger accounts.

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? 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 confirmations to all vendors.

b. 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.

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

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.

c. Individual who signs the checks.

The form typically used to confirm accounts payable: a. Does not require a response from the vendor. b. Confirms the balance recorded by the client at year-end. c. Requires the vendor to indicate the amount of the payable. d. Is the same as the form used to confirm accounts receivable.

c. Requires the vendor to indicate the amount of the payable.

Which of the following is the best audit procedure for determining the existence of unrecorded liabilities? a. Examine confirmation requests returned by creditors whose 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.

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

Which of the following manipulations would understate accounts payable on the financial statements? a. Overstatement of purchases. b. Closing the cash disbursements journal prior to year-end. c. Leaving the cash receipts journal open after year-end. d. Omission of expenses.

d. Omission of expenses.

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

d. Send confirmations relating to the estimate.

For good internal control, a copy of a receiving report should be sent to all of the following departments except: a. Accounts payable. b. Purchasing. c. Stores. d. Shipping.

d. Shipping

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. Correct


Related study sets

Quizlet - La escritura del sonido /k/

View Set

Research Methods Psych 344 Morling

View Set

Intermediate Macro Chapter 7 Quiz

View Set