Audit 2 - Soal UTS PDF

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Audit 2 - Soal UTS...

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1) A client erroneously recorded a large purchase twice. Which of the following internal 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. 2) Budd, the purchasing agent of Lake Hardware Wholesalers, has a relative who owns a retail hardware store. Budd arranged for hardware to be delivered by manufacturers to the relative’s retail store on a COD basis, thereby enabling his relative to buy at Lake’s wholesale prices. Budd was probably able to accomplish this because of Lake’s poor internal control over A) purchase requisitions. B) cash receipts. C) purchase orders. D) perpetual inventory records. 3) Which of the following is an internal control that will prevent paid cash disbursement documents from being presented for payment a second time? A) The date on cash disbursement documents must be within a few days of the date that the document is presented for payment. B) The official signing the check compares the check with the documents and should deface the documents. C) Unsigned checks are prepared by individuals who are responsible for signing checks. D) Cash disbursement documents are approved by at least two responsible management officials. 4) Which of the following questions would be best to include in an internal control questionnaire concerning the completeness assertion for purchases? A) Is an authorized purchase order required before the receiving department can accept a shipment or the vouchers payable department can record a voucher? B) Are purchase requisitions prenumbered and independently matched with vendor invoices? C) Is the unpaid voucher file periodically reconciled with inventory records by an employee who does not have access to purchase requisitions? D) Are purchase orders, receiving reports, and vouchers prenumbered and periodically accounted for? 5) In auditing accounts payable, an auditor’s procedures most likely will focus primarily on management’s assertion of A) existence. B) completeness. C) realizable value. D) valuation and allocation. 6) Which of the following audit procedures is best for identifying unrecorded trade accounts payable? A) Examining unusual relationships between monthly accounts payable balances and recorded cash payments. B) Reconciling vendors’ statements to the file of receiving reports to identify items received just prior to the balance sheet date. C) Reviewing cash disbursements recorded subsequent to the balance sheet date to deter mine whether the related payables apply to the prior period. D) Investigating payables recorded just prior to and just subsequent to the balance sheet date to determine whether they are supported by receiving reports.

7) An auditor traced a sample of purchase orders and the related receiving reports to the acquisitions journal and cash disbursements journal. The purpose of this substantive test of transactions most likely was to A) identify unusually large purchases that should be investigated further. B) verify that cash disbursements were for goods actually received. C) determine that purchases were properly recorded. D) test whether payments were for goods actually ordered. 8) For effective internal control, the accounts payable department generally should A) stamp, perforate, or otherwise cancel supporting documentation after payment is mailed. B) ascertain that each requisition is approved as to price, quantity, and quality by an authorized employee. C) omit information about the quantity ordered on the copy of the purchase order forwarded to the receiving department prior to receipt of goods. D) establish the agreement of the vendor’s invoice with the receiving report and purchase order. 9) When using confirmations to provide evidence about the completeness assertion for accounts payable, the appropriate population most likely is A) vendors with whom the entity has previously done business. B) amounts recorded in the accounts payable subsidiary ledger. C) payees of checks drawn in the month after year-end. D) invoices filed in the entity’s open invoice file. 10) A factory foreman at Steblecki Corporation discharged an hourly worker but did not notify the human resources department. The foreman then forged the worker’s signature on time cards and work tickets and, when giving out the checks, diverted the payroll checks drawn from the discharged worker to his own use. The most effective procedure for preventing this activity is to A) require written authorization for all employees added to or removed from the payroll. B) have a paymaster who has no other payroll responsibility distribute the payroll checks. C) have someone other than persons who prepare or distribute the payroll obtain custody of unclaimed payroll checks. D) from time to time, rotate persons distributing the payroll. 11) An auditor found that employee time records in one department are not properly approved by the supervisor. Which of the following could result? A) Duplicate paychecks might be issued. B) The wrong hourly rate could be used to calculate gross pay. C) Employees might be paid for hours they did not work. D) Payroll checks might not be distributed to the appropriate employees. 12) The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the A) human resource function from the controllership function. B) administrative controls from the internal accounting controls. C) authorization of transactions from the custody of related assets. D) operational responsibility from the record-keeping responsibility. 13) When control risk is assessed as low for assertions related to payroll, substantive tests of payroll balances most likely would be limited to applying analytical procedures and A) observing the distribution of payroll checks.

B) footing and crossfooting the payroll register. C) inspecting payroll tax returns. D) recalculating payroll accruals. 14) A common audit procedure in the audit of payroll transactions involves tracing selected items from the payroll journal to employee time cards that have been approved by supervisory personnel. This procedure is designed to provide evidence in support of the audit proposition that A) only proper employees worked and their pay was correctly computed. B) jobs on which employees worked were charged with the appropriate labor cost. C) internal controls over payroll disbursements are operating effectively. D) all employees worked the number of hours for which their pay was computed. 15) The accounting system will not post a sales transaction to the sales journal without a valid bill of lading number. This control is most relevant to which transaction related objective for sales? A) Accuracy B) Completeness C) Occurrence D) Posting and summarization 16) The accounting system automatically obtains the unit price based on scans of bar codes for merchandise sold. This control is most relevant to which transaction related objective for sales? A) Accuracy B) Occurrence C) Completeness D) Posting and summarization 17) Which of the following controls would be most effective in detecting a failure to record cash received from customers paying on their accounts? A) A person in accounting reconciles the bank deposit to the cash receipts journal. B) Transactions recorded in the cash receipts journal are posted on a real-time basis to the accounts receivable master file. C) Monthly statements are sent to customers and any discrepancies are resolved by someone independent of cash handling and accounting. D) Deposits of cash received are made daily. 18) A key internal control in the sales and collection cycle is the separation of duties between cash handling and record keeping. The objective most directly associated with this control is to verify that A) cash receipts recorded in the cash receipts journal are reasonable. B) cash receipts are correctly classified. C) recorded cash receipts result from legitimate transactions. D) existing cash receipts are recorded. 19) A manufacturing company received a substantial sales return in the last month of the year, but the credit memorandum for the return was not prepared until after the auditors had completed their testing. The returned merchandise was included in the physical inventory. A) Aged trial balance of accounts receivable is prepared. B) Credit memoranda are prenumbered and all numbers are accounted for. C) A reconciliation of the trial balance of customers’ accounts with the general ledger control is prepared periodically. D) Receiving reports are prepared for all materials received and such reports are accounted for on a timely basis.

20) Which of the following controls most likely will be effective in offsetting the tendency of sales personnel to maximize sales volume at the expense of high bad debt write-offs? A) Employees responsible for authorizing sales and bad debt write-offs are denied access to cash. B) Shipping documents and sales invoices are matched by an employee who does not have the authority to write off bad debts. C) Employees involved in the credit-granting function are separated from the sales function. D) Subsidiary accounts receivable records are reconciled to the control account by an employee independent of the authorization of credit. 21) A sales invoice for $5,200 was computed correctly but, by mistake, was entered as $2,500 to the sales journal and posted to the accounts receivable master file. The customer remitted only $2,500, the amount on his monthly statement. A) Prelisting and predetermined totals are used to control postings. B) Sales invoice numbers, prices, discounts, extensions, and footings are independently checked. C) The customers’ monthly statements are verified and mailed by a responsible person other than the bookkeeper who prepared them. D) Unauthorized remittance deductions made by customers or other matters in dispute Are investigated promptly by a person independent of the accounts receivable function. 22) An auditor is performing substantive tests of transactions for sales. One step is to trace a sample of debit entries from the accounts receivable master file back to the supporting duplicate sales invoices. What will the auditor intend to establish by this step? A) Sales invoices represent existing sales. B) All sales have been recorded. C) All sales invoices have been correctly posted to customer accounts. D) Debit entries in the accounts receivable master file are correctly supported by sales invoices. 23) To verify that all sales transactions have been recorded, a substantive test of trans actions should be completed on a representative sample drawn from A) entries in the sales journal. B) the billing file of sales orders. C) a file of duplicate copies of sales invoices for which all prenumbered forms in the series have been accounted. D) the shipping file of duplicate copies of bills of lading. 24) Which audit procedure is most effective in testing credit sales for overstatement? A) Trace a sample of postings from the sales journal to the sales account in the general ledger. B) Vouch a sample of recorded sales from the sales journal to shipping documents. C) Prepare an aging of accounts receivable. D) Trace a sample of initial sales orders to sales recorded in the sales journal....