chapter 8 quiz ACCT 470

Which of the following fraud signs could be detected by using data and analytic techniques? Search for invoices always slightly lower than a review threshold. Search for vendors with only post office box addresses. All of the choices are correct. Search for vendor's invoices submitted in numerical order.

All of the choices are correct.

Which of the following would NOT be included in the supporting documents for a voucher? Blank check Receiving report Purchase order Vendor invoice

Blank check

Which of the following procedures would an auditor most likely perform in searching for unrecorded payables? Reconcile receiving reports with related cash payments made just prior to year-end. Vouch a sample of creditor balances to supporting invoices, receiving reports, and purchase orders. Compare cash payments occurring after the balance sheet date with the accounts payable trial balance. Contrast the ratio of accounts payable to purchases with the prior year's ratio.

Compare cash payments occurring after the balance sheet date with the accounts payable trial balance.

Auditors usually focus on which assertion when auditing current liabilities? Accuracy. Occurrence. Completeness. Classification.

Completeness.

Which of the following is not a step in the search for unrecorded liabilities? Examine the open purchase order file. Examine the unmatched receiving reports. All of the above are steps in the search. Examine disbursements for the period immediately before the end of the period.

Examine disbursements for the period immediately before the end of the period.

An audit team would most likely examine the detail support for which of the following charges? Legal expense. Cost of goods sold Payroll expense Supplies expense

Legal expense.

If goods ordered under a binding purchase commitment permanently decline in value below the agreed on purchase prices, a company should. Record a loss for items not yet received. Disclose the terms of the commitment in the financial statements. Record a loss for items received.

Record a loss for items not yet received.

Which of the following accounts would most likely be reviewed by the auditor to gain reasonable assurance that additions to the equipment account are not understated? Depreciation expense Accounts payable Repairs and maintenance expense Gain on disposal of equipment

Repairs and maintenance expense

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

Search for unrecorded liabilities

Which of the following situations indicates a potential material weakness in internal control over acquisition and expenditure? Purchase orders are not prepared for services acquired directly under authorization of department heads. Unacceptable goods are not scheduled on receiving reports. The same person signs checks and stamps vouchers PAID. The same person authorizes voucher packages and signs checks.

The same person authorizes voucher packages and signs checks.

An entity's internal control structure requires for every check request that there be an approved voucher, supported by a prenumbered purchase order and a prenumbered receiving report. To determine whether checks are being issued for unauthorized expenditures, an auditor most likely would select items for testing from the population of all. receiving reports. approved vouchers. purchase orders. canceled checks.

canceled checks.

An auditor is planning the testing of the accounts payable balance. The auditor's main concerns should be valuation and accuracy. existence and accuracy. completeness and cutoff. occurrence and cutoff.

completeness and cutoff.

In determining the effectiveness of an entity's policies and procedures relating to the occurrence assertion for payroll transactions, auditors most likely would inquire about and... inspect evidence of accounting for prenumbered payroll checks. observe the separation of duties concerning personnel responsibilities and payroll disbursement. verify the preparation of the monthly payroll account bank reconciliation. recompute the payroll deductions for employee fringe benefits.

observe the separation of duties concerning personnel responsibilities and payroll disbursement.

Vouchers should be stamped PAID to. generate a new purchase order. prevent duplicate payment. facilitate preparation of the bank reconciliation. indicate posting in the voucher register.

prevent duplicate payment.

A voucher package is used to provide a source document for recording the purchase of a good or service. document a purchase contract. document receipt of inventory. document completion of services.

provide a source document for recording the purchase of a good or service.