Q11. In performing a test of controls, the auditors vouch asample of entries in the purchases journal to the supportingdocuments. Which assertion would this test of controls most likelytest?
A. Completeness
B. Existence
C. Valuation
D. Rights
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 storeΓ’ΒΒs department
Q8. Which of the following should be included as a part ofinventory costs of a manufacturing company?
A. Factory Overhead only
B. Direct Labor and Raw Materials
C. Direct Labor, Raw Materials and Factory Overhead
D. None of the Above
Q9. When a primary risk related to an audit is possibleoverstated inventory, the assertion most directly related is:
A. Existence
B. Completeness
C. Clarity
D. Presentation
Q10. When confirming accounts payable, the approach is mostlikely 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 haspreviously done the most business, plus a sample of otheraccounts.
C. Selecting a random sample of accounts payable at year-end
D. Confirming all accounts
Q1. Reconciliation of the bank account should not be performedby a person who also processes cash disbursements.
A. True B. False
Q2. Which of the following controls would most likely reduce therisk of diversion of customer payments by a clientΓ’ΒΒs employees?
A. Pre-numbered checks
B. A bank lockbox
C. Monthly bank reconciliations
D. Daily deposit of cash receipts
Q3. The best way to verify the amounts of dividend revenuereceived during the year is:
A. Re-computation of dividend revenue
B. Examination of cash disbursementrecords
C. Verification by reference to dividend record books
D. Confirmation with dividend-paying companies
Q4. To determine that all sales have been recorded, the auditorswould select a sample of transactions from the:
A. Shipping Department Files C. Receiving Department Files
B. Accounts Receivable Ledger D. Sales Journal
Q5. Which of the following is most likely to be an example offraudulent financial reporting related to sales?
A. Inaccurate billing due to a lack of internalcontrols
B. Recording sales when the customer is very likely to returnthe goods
C. Misbilling a client due to a data input error
D. Cashier error when recording a cash sale
Q6. Which of the following is NOT among the criteria thatordinarily exist for revenue to be recognized?
A. Persuasive evidence of an arrangementexists
B. Collectability is reasonably assured
C. The sellerΓ’ΒΒs price to the buyer is fixed or determinable
D. Delivery is scheduled to occur at some point in thefuture
Q7. The receiving department is least likely to be responsiblefor 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 storeΓ’ΒΒs department