The basic acquisition and expenditure activities are (1) purchasing goods and services and (2) receiving cash receipts
True
False
False
The accounts payable trial balance is a list of payable amounts by vendor, but the sum shouldn't agree with the accounts payable control account
True
False
False
If tests of controls reveal weaknesses, the auditor should feel free to observe inventory results on a date prior to year-end, and the sample size can be fairly small
True
False
False
Physical observation procedures are designed to audit for existence, completeness, and valuation.
True
False
True
An auditor should not be concerned if a cross-reference of vendor addresses with employee addresses reveals that there are matches.
True
False
False
detail test of control procedure:
consists of (1) identification of the data population from which a sample of items will be selected for audit and (2) an expression of the action that will be taken to produce relevant evidence. In general, the actions in detail test of control audit procedures involve vouching, tracing, observing, scanning and recalculating.
paper trail:
set of telltale signs of erroneous accounting, missing or altered documents or a "dangling debit" (the false or erroneous debit that results from an overstatement of assets).
search for unrecorded liabilities:
set of procedures designed to yield audit evidence of liabilities that were not recorded in the reporting period.
test of controls:
ordinary and extended procedures designed to produce evidence about the effectiveness of client controls that should be in operation.
The Control Objective associated with observing the work habits of the inventory recordkeeping department personnel is:
a. Authorization
b. Environment
c. Completeness
d. Accuracy
b. Environment
The Control Objective associated with selecting a sample of inventory receiving reports and tracing them to the entry of receipt on the perpetual inventory record is:
a. Authorization
b. Completeness
c. Authorization and Completeness
d. Validity
c. Authorization and Completeness
The acquisition and expenditure cycle does not include this account:
a. Inventory
b. Capital Assets
c. Accumulated Depreciation
d. Accounts Receivable
d. Accounts Receivable
The following document is not associated with the Acquisition and Expenditure Cycle:
a. Vendor Invoice
b. Perpetual Inventory record
c. Purchase Order
d. Customer Order
d. Customer Order
With respect to recording transactions in the acquisition and expenditure cycle, the following is done when the purchase order, vendor's invoice, and receiving reports are in hand:
a. debits are made to proper inventory, fixed asset and expense accounts, and with a credit to accounts payable
b. debits are made to proper inventory, fixed asset and payable accounts, and a credit to revenue
c. debits are made to payables and expense acccounts, and a credit to inventory and capital assets
d. None of the above
a. debits are made to proper inventory, fixed asset and expense accounts, and with a credit to accounts payable
