LATIHAN SOAL BAB 11 - AUDITING II's Weblog
LATIHAN SOAL BAB 11
|1. |Which of the following best describes the process for assessing control risk? |
| |[pic]A. |
| |(1) Perform tests of controls, and (2) evaluate the evidence and assess control risk. |
| | |
| | |
| |[pic]B. |
| |(1) Identify necessary controls, (2) perform tests of controls, and (3) evaluate the evidence and assess control risk. |
| | |
| | |
| |[pic]C. |
| |(1) Identify potential misstatements that could occur, (2) identify necessary controls, (3) perform tests of controls, and |
| |(4) evaluate the evidence and assess control risk. |
| | |
| | |
| |[pic]D. |
| |(1) Consider the knowledge acquired from obtaining the understanding of internal control, (2) identify potential |
| |misstatements that could occur, (3) identify necessary controls, (4) perform tests of controls, and (5) evaluate the evidence|
| |and assess control risk. |
| | |
|2. |Which of the following represents the necessary control and the test of control that would control the risk of duplicate |
| |payment of an accounts payable voucher? |
| |[pic]A. |
| |Necessary control; The computer matches check information with the supporting voucher: Test of control; Submit test data to |
| |see that the computer appropriately matches check information with voucher information. |
| | |
| | |
| |[pic]B. |
| |Necessary control; The computer electronically cancels the voucher and supporting information when the check is issued: Test |
| |of control; Submit test data to see that the computer rejects duplicate payments. |
| | |
| | |
| |[pic]C. |
| |Necessary control; The computer matches voucher date with the check date: Test of control; Submit test data to see that the |
| |computer appropriately matches dates on the voucher and on the check. |
| | |
| | |
| |[pic]D. |
| |Necessary control; There is separate duties for approving voucher and signing checks: Test of control; Observe segregation of|
| |duties |
| | |
|3. |Controls over the completeness assertion generally |
| |[pic]A. |
| |start by capturing information about a transaction when it is initiated and then follow the transaction forward through |
| |receipt or deliver and recording. |
| | |
| | |
| |[pic]B. |
| |compare information associated with the recording of transactions with information associated with the passage of title, |
| |which is normally captured during the delivery or receipt of goods and services. |
| | |
| | |
| |[pic]C. |
| |compare information associated with the recording of transactions with information obtained both with the delivery or receipt|
| |of goods and services and information associated with the initiation of the transaction. |
| | |
| | |
| |[pic]D. |
| |compare information associated with the recording of transactions with information created when the transaction is initiated.|
| | |
|4. |When obtaining an understanding of internal controls the auditor identifies important programmed application controls over |
| |the occurrence of sales, however, the auditor also has serious concerns about the adequacy of the control environment due to |
| |a weak tone at the top about control consciousness. Which of the following best describes how the auditor should respond to|
| |this situation when planning tests of occurrence of sales? |
| |[pic]A. |
| |The auditor could assess control risk as low for an assertion after performing computer assisted audit techniques on controls|
| |relevant to that assertion. |
| | |
| | |
| |[pic]B. |
| |The auditor could assess control risk as low for an assertion after performing computer assisted audit techniques on controls|
| |relevant to that assertion and assessing the adequacy of segregation of duties. |
| | |
| | |
| |[pic]C. |
| |The auditor will probably assess control risk at the maximum irrespective of the quality of the programmed application |
| |controls. |
| | |
| | |
| |[pic]D. |
| |The auditor could assess control risk as low for an assertion if significant performance reviews are placed in operation. |
| | |
|5. |After obtaining an understanding of internal control and assessing control risk the auditors decided not to perform |
| |additional tests of controls. The auditor most likely concluded that the |
| |[pic]A. |
| |additional evidence to support a further reduction in control risk was not cost beneficial to obtain. |
| | |
| | |
| |[pic]B. |
| |assessed level of inherent risk exceeded the assessed level of control risk. |
| | |
| | |
| |[pic]C. |
| |internal controls were properly designed and justifiably may be relied upon. |
| | |
| | |
| |[pic]D. |
| |evidence obtained through tests of controls would not support an increased level control risk. |
| | |
|6. |When an auditor increases the planned assessed level of control risk because certain control procedures were determined to be|
| |ineffective, the auditor would most likely increase the |
| |[pic]A. |
| |extent of tests of controls. |
| | |
| | |
| |[pic]B. |
| |planned level of detection risk. |
| | |
| | |
| |[pic]C. |
| |planned level of substantive tests. |
| | |
| | |
| |[pic]D. |
| |level of inherent risk. |
| | |
|7. |Which of the following is not a step in an auditor's decision to asses control risk at below the maximum? |
| |[pic]A. |
| |Evaluate the effectiveness of the internal control procedures with tests of controls. |
| | |
| | |
| |[pic]B. |
| |Obtain an understanding of the entity's accounting system and control environment. |
| | |
| | |
| |[pic]C. |
| |Perform tests of details of transactions to detect material misstatements in the financial statements. |
| | |
| | |
| |[pic]D. |
| |Consider whether control procedures can have a pervasive effect on financial statement assertions. |
| | |
|8. |The ultimate purpose of assessing control risk is to contribute to the auditor's evaluation of the risk that |
| |[pic]A. |
| |specified controls requiring segregation of duties may be circumvented by collusion. |
| | |
| | |
| |[pic]B. |
| |entity policies may be overridden by senior management. |
| | |
| | |
| |[pic]C. |
| |tests of controls may fail to identify procedures relevant to assertions. |
| | |
| | |
| |[pic]D. |
| |material misstatements may exist in the financial statement assertions. |
| | |
|9. |A procedure that would most likely be used by an auditor in performing tests of control procedures that involve segregation |
| |of functions and that leave no transaction trail is |
| |[pic]A. |
| |inspection. |
| | |
| | |
| |[pic]B. |
| |observation. |
| | |
| | |
| |[pic]C. |
| |reperformance. |
| | |
| | |
| |[pic]D. |
| |reconciliation. |
| | |
|10. |If an auditor decides to assess control risk as low based on computer application control procedures, which of the following|
| |would not be part of the auditor's strategy for testing controls? |
| |[pic]A. |
| |testing the effectiveness of computer general control procedures |
| | |
| | |
| |[pic]B. |
| |testing the effectiveness of management controls over computer output |
| | |
| | |
| |[pic]C. |
| |testing the effectiveness of manual follow-up procedures |
| | |
| | |
| |[pic]D. |
| |testing the effectiveness of computer application control procedures |
| | |
|11. |When control risk is assessed at the maximum level for all financial statement assertions, an auditor should document the |
| |auditor's |
| |[pic]A. |
| |conclusion that control risk is at the maximum level – no; basis for concluding that control risk is at the maximum level – |
| |no. |
| | |
| | |
| |[pic]B. |
| |conclusion that control risk is at the maximum level – no; basis for concluding that control risk is at the maximum level – |
| |yes. |
| | |
| | |
| |[pic]C. |
| |conclusion that control risk is at the maximum level – yes; basis for concluding that control risk is at the maximum level –|
| |no. |
| | |
| | |
| |[pic]D. |
| |conclusion that control risk is at the maximum level – yes; basis for concluding that control risk is at the maximum level –|
| |yes. |
| | |
|12. |If an auditor submits test data on an on-line, real-time basis to test computer application controls, this is most likely |
| |done as part of which of the following approaches to testing controls? |
| |[pic]A. |
| |parallel simulation |
| | |
| | |
| |[pic]B. |
| |test data |
| | |
| | |
| |[pic]C. |
| |integrated test facility |
| | |
| | |
| |[pic]D. |
| |systems control audit review file |
| | |
|13. |If the auditor assessed control risk as low for an assertion based on tests performed during the first 10 months of the |
| |year, which of the following would be LEAST LIKELY to be performed to update the auditor's conclusion about control risk? |
| |[pic]A. |
| |The auditor would consider the significance of the assertion involved. |
| | |
| | |
| |[pic]B. |
| |The auditor would consider the results of the tests of controls used to make that evaluation. |
| | |
| | |
| |[pic]C. |
| |The auditor would consider the evidential matter about design or operation that may result from substantive test performed |
| |in the remaining period. |
| | |
| | |
| |[pic]D. |
| |The auditor would consider the changes in the industry and the entity's operating environment. |
| | |
|14. |Which of the following factors would generally NOT influence the auditor's decision about sample size when making decisions |
| |about the extent of tests of controls? |
| |[pic]A. |
| |the nature of the control |
| | |
| | |
| |[pic]B. |
| |the operating effectiveness of the control environment |
| | |
| | |
| |[pic]C. |
| |the frequency of operation of the control |
| | |
| | |
| |[pic]D. |
| |the importance of the control |
| | |
|15. |A dual-purpose test normally involves: |
| |[pic]A. |
| |performing analytical procedures and tests of controls simultaneously. |
| | |
| | |
| |[pic]B. |
| |using the same evidence to draw a conclusion for tests of controls and for substantive tests. |
| | |
| | |
| |[pic]C. |
| |using the same evidence to draw a conclusion about tests of controls and to develop a preliminary audit strategy. |
| | |
| | |
| |[pic]D. |
| |performing tests of details of transactions and analytical procedures simultaneously. |
| | |
|16. |An auditor makes the following assessments of internal controls for material transaction classes: |
| |• Completeness assertion related to credit sales as high |
| |• Existence and Occurrence assertion related to credit sales as low |
| |• Completeness assertion related to the cash receipts function as low |
| |• Existence and Occurrence assertion related to the cash receipts function as high |
| |• Completeness assertion related to the sales returns function as low |
| |• Existence and Occurrence assertion related to the sales and returns function as high |
| | |
| |Based on these assessments the auditor is likely to conservatively set control risk for the existence of accounts receivable|
| |at: |
| |[pic]A. |
| |low. |
| | |
| | |
| |[pic]B. |
| |moderate. |
| | |
| | |
| |[pic]C. |
| |high. |
| | |
| | |
| |[pic]D. |
| |maximum. |
| | |
|17. |A material weakness in internal controls is one in which: |
| |[pic]A. |
| |there is less than a remote chance that a misstatement that is more than inconsequential will occur. |
| | |
| | |
| |[pic]B. |
| |there is more than a remote chance that a misstatement that is more than inconsequential will occur. |
| | |
| | |
| |[pic]C. |
| |there is less than a remote chance that a material misstatement will occur. |
| | |
| | |
| |[pic]D. |
| |there is more than a remote chance that a material misstatement will occur. |
| | |
|18. |For a private company which of the following statements is true about reporting deficiencies in internal controls? |
| |[pic]A. |
| |reporting in the auditor's report – none; reporting to the audit committee – only material weaknesses |
| | |
| | |
| |[pic]B. |
| |reporting in the auditor's report – none; reporting to the audit committee – both significant deficiencies and only |
| |weaknesses |
| | |
| | |
| |[pic]C. |
| |reporting in the auditor's report – only material weaknesses; reporting to the audit committee – both significant |
| |deficiencies and only weaknesses |
| | |
| | |
| |[pic]D. |
| |reporting in the auditor's report – only material weaknesses; reporting to the audit committee – only material weaknesses |
| | |
LATIHAN SOAL BAB 12
|1. |Which of the following best describes the steps involved in assessing the risk of material misstatements? |
| |[pic]A. |
| |(1) Evaluate the type of potential misstatements that can occur, (2) evaluate the magnitude of potential misstatements, (3) |
| |evaluate the likelihood of potential misstatements. |
| | |
| | |
| |[pic]B. |
| |(1) Assess inherent risk, (2) assess control risk, (3) assess detection risk. |
| | |
| | |
| |[pic]C. |
| |(1) Evaluate the magnitude of potential misstatements, (2) evaluate the likelihood of potential misstatements. |
| | |
| | |
| |[pic]D. |
| |(1) Assess inherent risk, (2) assess control risk, (3) assess analytical procedures risk, (4) assess test of details risk. |
| | |
|2. |A construction industry client uses the percentage of completion method to recognize revenue and expense on current projects.|
| |Which of the following best describes the types of potential misstatements that the auditor should be concerned about? |
| |[pic]A. |
| |It is possible that inventory is overstated. The auditor should be alert to problems with the existence and occurrence or |
| |valuation and allocation of inventory. |
| | |
| | |
| |[pic]B. |
| |Significant revenues, expense, assets and liabilities arise from this accounting estimate. The auditor should be alert for |
| |problems with the valuation and allocation assertion. |
| | |
| | |
| |[pic]C. |
| |A weak control environment may have a pervasive impact on many assertions. |
| | |
| | |
| |[pic]D. |
| |Weak industry trends might impact the completeness of revenues. |
| | |
|3. |Analytical procedures for a retailer show significant increases in both profit margins and inventory turn days. Which of the |
| |following best describes the types of potential misstatements that the auditor should be concerned about? |
| |[pic]A. |
| |The auditor should be concerned about revenue recognition problems. |
| | |
| | |
| |[pic]B. |
| |The auditor should be concerned about the completeness of inventory. |
| | |
| | |
| |[pic]C. |
| |The auditor should be concerned about the existence of inventory. |
| | |
| | |
| |[pic]D. |
| |The auditor should be concerned about the completeness of revenues. |
| | |
|4. |If the auditor plans to following a primarily substantive approach detection risk is normally assessed as: |
| |[pic]A. |
| |maximum or moderate |
| | |
| | |
| |[pic]B. |
| |high or moderate |
| | |
| | |
| |[pic]C. |
| |moderate or low |
| | |
| | |
| |[pic]D. |
| |low or very low |
| | |
|5. |If the auditor plans to follow a lower assessed level of control risk approach the auditor will usually plan: |
| |[pic]A. |
| |less extensive substantive tests at year-end. |
| | |
| | |
| |[pic]B. |
| |more extensive substantive tests at year-end. |
| | |
| | |
| |[pic]C. |
| |less extensive substantive tests at an interim date. |
| | |
| | |
| |[pic]D. |
| |more extensive substantive tests at an interim date. |
| | |
|6. |Which of the following best contrasts tests of controls and substantive tests? |
| |[pic]A. |
| |Tests of controls are usually performed at interim and substantive tests are usually performed at year-end. |
| | |
| | |
| |[pic]B. |
| |Both tests of controls and substantive tests are primarily designed to provide evidence about control risk. |
| | |
| | |
| |[pic]C. |
| |Tests of control are designed to draw a conclusion about frequency of deviations from proscribed controls and substantive |
| |tests are designed to draw conclusions about monetary errors. |
| | |
| | |
| |[pic]D. |
| |Both tests of controls and substantive tests are always required by GAAS. |
| | |
|7. |Generalized audit software is normally NOT designed to perform which of the following? |
| |[pic]A. |
| |Reconcile detail audit data with the general ledger. |
| | |
| | |
| |[pic]B. |
| |Perform tests on an entire population. |
| | |
| | |
| |[pic]C. |
| |Select and print audit samples. |
| | |
| | |
| |[pic]D. |
| |Assess detection risk. |
| | |
|8. |Which of the following would NOT describe the nature of a substantive test? |
| |[pic]A. |
| |initial procedures |
| | |
| | |
| |[pic]B. |
| |tests of details of accounting estimates |
| | |
| | |
| |[pic]C. |
| |tests of details of disclosures |
| | |
| | |
| |[pic]D. |
| |risk assessment procedures |
| | |
|9. |If an auditor sends a confirmation of a customers balance in accounts receivables, this best described as a(n): |
| |[pic]A. |
| |initial procedure. |
| | |
| | |
| |[pic]B. |
| |analytical procedure. |
| | |
| | |
| |[pic]C. |
| |test of details of balances. |
| | |
| | |
| |[pic]D. |
| |test of details of accounting estimates. |
| | |
|10. |Which of the following factors would tend to increase sample sizes? |
| |[pic]A. |
| |The audit population is homogeneous. |
| | |
| | |
| |[pic]B. |
| |The auditor is willing to accept a large amount of tolerable misstatement. |
| | |
| | |
| |[pic]C. |
| |The audit population is a large audit population. |
| | |
| | |
| |[pic]D. |
| |The auditor is willing to accept a high level of detection risk. |
| | |
|11. |Which of the following would normally NOT be performed when auditing an accounting estimate? |
| |[pic]A. |
| |Send a confirmation or obtain evidence from an outside third party. |
| | |
| | |
| |[pic]B. |
| |Perform procedures to review and test management's process in making the estimate. |
| | |
| | |
| |[pic]C. |
| |Prepare an independent expectation of the estimate. |
| | |
| | |
| |[pic]D. |
| |Review subsequent transactions and events occurring prior to completing the audit that pertain to the estimate. |
| | |
|12. |As the acceptable level of detection risk decreases, the assurance directly provided from |
| |[pic]A. |
| |substantive tests should increase. |
| | |
| | |
| |[pic]B. |
| |substantive tests should decrease. |
| | |
| | |
| |[pic]C. |
| |tests of controls should increase. |
| | |
| | |
| |[pic]D. |
| |tests of controls should decrease. |
| | |
|13. |As the acceptable level of detection risk decreases, an auditor may change the |
| |[pic]A. |
| |timing of substantive tests by performing them at an interim date rather than at year-end. |
| | |
| | |
| |[pic]B. |
| |nature of substantive tests from a less effective to a more effective procedure. |
| | |
| | |
| |[pic]C. |
| |timing of tests of controls by performing them at several dates rather than at one time. |
| | |
| | |
| |[pic]D. |
| |assessed level on inherent risk to a higher amount. |
| | |
|14. |Which of the following conditions does NOT need to exist in order for the auditor to consider moving the timing of a |
| |substantive test to an interim date? |
| |[pic]A. |
| |Internal control during the interim period and year-end is effective. |
| | |
| | |
| |[pic]B. |
| |There are no conditions or circumstances that might predispose management to misstate the financial statements in the |
| |remaining period. |
| | |
| | |
| |[pic]C. |
| |Inherent risk would be assessed as low. |
| | |
| | |
| |[pic]D. |
| |The year-end balances of the accounts examined at the interim date are reasonably predictable as to amount, relative |
| |significance, and composition. |
| | |
|15. |If detection risk is assessed as low the auditor will normally consider which of the following? |
| |[pic]A. |
| |Perform more effective audit procedures, with larger samples sizes, at year-end. |
| | |
| | |
| |[pic]B. |
| |Perform more effective audit procedures, with smaller samples sizes, at year-end. |
| | |
| | |
| |[pic]C. |
| |Perform less effective audit procedures, with smaller samples sizes, at an interim date. |
| | |
| | |
| |[pic]D. |
| |Perform more effective audit procedures, with smaller samples sizes, at an interim date. |
| | |
|16. |An auditor's decision either to apply analytical procedures as substantive tests or to perform tests of transaction and |
| |account balances usually is determined by the |
| |[pic]A. |
| |availability of data aggregated at a high level. |
| | |
| | |
| |[pic]B. |
| |relative effectiveness of the tests. |
| | |
| | |
| |[pic]C. |
| |timing of tests performed at the balance sheet date. |
| | |
| | |
| |[pic]D. |
| |auditor's familiarity with industry trends. |
| | |
|17. |Auditors try to identify predictable relationships when using analytical procedures. Relationships involving transactions |
| |form which of the following accounts most likely would yield the highest level of evidence using analytical procedures? |
| |[pic]A. |
| |total revenues and number of sales for a retail grocer |
| | |
| | |
| |[pic]B. |
| |total revenues, the number of rooms, occupancy rates, and average room rate for a hotel |
| | |
| | |
| |[pic]C. |
| |total revenues and the number of subscribers for a magazine |
| | |
| | |
| |[pic]D. |
| |total interest expense and the average principal balance outstanding for a construction company building new homes |
| | |
|18. |After identifying related party transactions, an auditor most likely would |
| |[pic]A. |
| |substantiate that the transactions were consummated on terms equivalent to those prevailing in arms-length transactions. |
| | |
| | |
| |[pic]B. |
| |discuss the implications of the transactions with third parties, such as the entity's attorney and bankers. |
| | |
| | |
| |[pic]C. |
| |determine whether the transactions were approved by the board of directors or other appropriate officials. |
| | |
| | |
| |[pic]D. |
| |ascertain whether the transactions would have occurred if the parties had not been related. |
| | |
|19. |The purpose of an audit program for substantive tests is to: |
| |[pic]A. |
| |describe the nature of procedures to be performed - yes; describe the timing of substantive – yes; ensure that audit |
| |evidence is obtained for all audit objectives – yes. |
| | |
| | |
| |[pic]B. |
| |describe the nature of procedures to be performed - yes; describe the timing of substantive – yes; ensure that audit |
| |evidence is obtained for all audit objectives – not necessarily. |
| | |
| | |
| |[pic]C. |
| |describe the nature of procedures to be performed - yes; describe the timing of substantive – not necessarily; ensure that |
| |audit evidence is obtained for all audit objectives – yes. |
| | |
| | |
| |[pic]D. |
| |describe the nature of procedures to be performed - not necessarily; describe the timing of substantive – not necessarily; |
| |ensure that audit evidence is obtained for all audit objectives – yes. |
| | |
Latihan Chapter 13
|1. |In the audit of Fine Host Corporation, the SEC found that the audit team, under the supervision of John Bacsik, |
| |[pic]A. |
| |did not project the results of the sample on the entire population. |
| | |
| | |
| |[pic]B. |
| |used a sample size that was too small. |
| | |
| | |
| |[pic]C. |
| |did not use statistical sampling for substantive tests. |
| | |
| | |
| |[pic]D. |
| |did not use statistical sampling for tests of controls. |
| | |
|2. |An advantage to using statistical over nonstatistical sampling methods in tests of controls is that the statistical methods |
| |[pic]A. |
| |afford greater assurance than a nonstatistical sample of equal size. |
| | |
| | |
| |[pic]B. |
| |provide an objective basis for quantitatively evaluating sample risks. |
| | |
| | |
| |[pic]C. |
| |can more easily convert the sample into a dual purpose test useful for substantive testing. |
| | |
| | |
| |[pic]D. |
| |eliminate the need to use judgment in determining appropriate sample sizes. |
| | |
|3. |The risk of incorrect acceptance and the likelihood of assessing control risk too low relate to the |
| |[pic]A. |
| |effectiveness of the audit. |
| | |
| | |
| |[pic]B. |
| |efficiency of the audit. |
| | |
| | |
| |[pic]C. |
| |preliminary estimates of materiality levels. |
| | |
| | |
| |[pic]D. |
| |allowable risk of tolerable error. |
| | |
|4. |Which of the following is NOT related to nonsampling risk? |
| |[pic]A. |
| |human mistakes, such as failing to recognize errors in documents |
| | |
| | |
| |[pic]B. |
| |applying auditing procedures inappropriate to the audit objective |
| | |
| | |
| |[pic]C. |
| |using nonstatistical sampling for procedures such as sending confirmations |
| | |
| | |
| |[pic]D. |
| |misinterpreting the results of a sample |
| | |
|5. |The purpose of an audit sample for tests of controls is to: |
| |[pic]A. |
| |determine the estimated risk of assessing control risk too low. |
| | |
| | |
| |[pic]B. |
| |determine the estimated risk of assessing control risk too high. |
| | |
| | |
| |[pic]C. |
| |determine the estimated rate of deviations from prescribed control procedures in a population. |
| | |
| | |
| |[pic]D. |
| |determine the estimated rate of deviation from prescribed control procedures in a sample. |
| | |
|6. |To determine the sample size for a test of controls, an auditor should consider nature of the control, the frequency of |
| |operation of the control, the importance of the control, the tolerable deviation rate, the allowable risk of assessing |
| |control risk too low, the population size and the |
| |[pic]A. |
| |expected deviation rate. |
| | |
| | |
| |[pic]B. |
| |upper precision limit. |
| | |
| | |
| |[pic]C. |
| |risk of incorrect acceptance. |
| | |
| | |
| |[pic]D. |
| |risk of incorrect rejection. |
| | |
|7. |If an auditor plans to assess control risk as low, which of the following best describes a reasonable range for the auditor's|
| |tolerable deviation rate? |
| |[pic]A. |
| |1% - 5% |
| | |
| | |
| |[pic]B. |
| |2% - 7% |
| | |
| | |
| |[pic]C. |
| |6% - 12% |
| | |
| | |
| |[pic]D. |
| |11% - 20% |
| | |
|8. |Which of the following factors is associated with smaller sample sizes for tests of controls? |
| |[pic]A. |
| |The control is a manual control. |
| | |
| | |
| |[pic]B. |
| |The control operates frequently (e.g., on every transaction) |
| | |
| | |
| |[pic]C. |
| |The auditor determines that he or she can accept a small amount of sampling risk – the risk of assessing control risk too |
| |low. |
| | |
| | |
| |[pic]D. |
| |The auditor determines that he or she can accept a larger tolerable deviation rate. |
| | |
|9. |Which of the following statements is correct concerning audit sampling for tests of controls? |
| |[pic]A. |
| |The population size has little or no effect on determining sample size except for small populations (population sizes less |
| |than 5,000). |
| | |
| | |
| |[pic]B. |
| |The expected population deviation rate has little or no effect on determining sample size except for small populations |
| |(population sizes less than 5,000). |
| | |
| | |
| |[pic]C. |
| |For larger population sizes, as the population size doubles the sample size also should double. |
| | |
| | |
| |[pic]D. |
| |For a given tolerable rate, a larger sample size should be selected as the expected population deviation rate decreases. |
| | |
|10. |In planning a statistical sample for a test of controls, an auditor increased the expected population deviation rate from |
| |the prior year's rate because of the results of the prior year's tests of controls and the overall control environment. If |
| |other factors remain constant, compared to last year this will cause an increase in |
| |[pic]A. |
| |tolerable rate. |
| | |
| | |
| |[pic]B. |
| |allowance for sampling risk. |
| | |
| | |
| |[pic]C. |
| |risk of assessing control risk too low. |
| | |
| | |
| |[pic]D. |
| |sample size. |
| | |
|11. |An auditor plans to examine a sample of 20 checks for countersignatures as prescribed by the client's internal control |
| |procedures. One of the checks in the chosen sample of 20 cannot be found. The auditor should consider the reasons for this |
| |limitation and |
| |[pic]A. |
| |evaluate the results as if the sample size had been 19. |
| | |
| | |
| |[pic]B. |
| |treat the missing check as a deviation for the purpose of evaluating the sample. |
| | |
| | |
| |[pic]C. |
| |treat the missing check in the same manner as the majority of the other 19 checks, that is, countersigned or not. |
| | |
| | |
| |[pic]D. |
| |choose another check to replace the missing check in the sample. |
| | |
|12. |In the audit of the financial statements of Delta Company, the auditor determines that in performing a test of controls, the|
| |deviation rate in the sample does not support the planned control risk when, in fact, the true deviation rate in the |
| |population does support the planned control risk. This situation illustrates the risk of |
| |[pic]A. |
| |assessing control risk too high. |
| | |
| | |
| |[pic]B. |
| |assessing control risk too low. |
| | |
| | |
| |[pic]C. |
| |incorrect rejection. |
| | |
| | |
| |[pic]D. |
| |incorrect acceptance. |
| | |
|13. |An auditor may use either of two statistical sampling approaches in substantive testing, probability-proportional-to-size |
| |(PPS) sampling or classical variables sampling. PPS sampling is primarily applicable in testing for |
| |[pic]A. |
| |the number of errors in year-end sales cutoff. |
| | |
| | |
| |[pic]B. |
| |an overstatement of accounts receivable. |
| | |
| | |
| |[pic]C. |
| |an understatement of accounts payable. |
| | |
| | |
| |[pic]D. |
| |proper segregation of duties in accounts receivable collections. |
| | |
|14. |In a probability-proportional-to-size sample with a sampling interval of $10,000, an auditor discovered that a selected |
| |account receivable with a recorded amount of $5,000 had an audit amount of $2,000. The projected misstatement of this sample|
| |was |
| |[pic]A. |
| |$3,000. |
| | |
| | |
| |[pic]B. |
| |$4,000. |
| | |
| | |
| |[pic]C. |
| |$6,000. |
| | |
| | |
| |[pic]D. |
| |$8,000. |
| | |
|15. |Which of the following most likely would be an advantage in using classical variables sampling rather than |
| |probability-proportional-to-size (PPS) sampling? |
| |[pic]A. |
| |An estimate of the standard deviation of the population's recorded amounts is not required. |
| | |
| | |
| |[pic]B. |
| |The auditor rarely needs the assistance of a computer program to design an efficient sample. |
| | |
| | |
| |[pic]C. |
| |Inclusion of zero and negative balances generally does not require special design considerations. |
| | |
| | |
| |[pic]D. |
| |Any amount that is individually significant is automatically identified and selected. |
| | |
|16. |While performing a substantive test of details during an audit, the auditor determined that the sample results supported the|
| |conclusion that the recorded account balance was materially misstated. It was, in fact, not materially misstated. This |
| |situation illustrates the risk of |
| |[pic]A. |
| |incorrect rejection. |
| | |
| | |
| |[pic]B. |
| |incorrect acceptance. |
| | |
| | |
| |[pic]C. |
| |assessing control risk too low. |
| | |
| | |
| |[pic]D. |
| |assessing control risk too high. |
| | |
|17. |An advantage of using statistical sampling techniques is that such techniques |
| |[pic]A. |
| |mathematically measure and control sampling risk. |
| | |
| | |
| |[pic]B. |
| |eliminate the need for judgmental decisions. |
| | |
| | |
| |[pic]C. |
| |define the values of tolerable error and risk of incorrect acceptance required to provide audit satisfaction. |
| | |
| | |
| |[pic]D. |
| |have been established in the courts to be superior to judgment sampling. |
| | |
|18. |When planning a statistical PPS sample, which of the following factors would normally increase sample size compared to the |
| |same population for the previous year? |
| |[pic]A. |
| |The population size in terms of book value has decreased. |
| | |
| | |
| |[pic]B. |
| |The auditor decides to accept a larger amount of tolerable misstatement. |
| | |
| | |
| |[pic]C. |
| |The auditor decides to accept a smaller amount of risk of incorrect acceptance. |
| | |
| | |
| |[pic]D. |
| |The auditor estimates that the anticipated misstatement in the population has decreased. |
| | |
|19. |The auditor's decision about the risk of incorrect acceptance affects which of the following factors in a statistical PPS |
| |sample? |
| |[pic]A. |
| |tolerable misstatement |
| | |
| | |
| |[pic]B. |
| |reliability factor |
| | |
| | |
| |[pic]C. |
| |book value of the population |
| | |
| | |
| |[pic]D. |
| |anticipated misstatement |
| | |
|20. |An auditor uses nonstatistical ratio estimation to evaluate the results of a sample. The population book value was |
| |$2,000,000 and contained 350 items. The auditor selected 100 items with a book value of $500,000. The audited value of the |
| |sample was $480,000. The estimated audited value of the population is: |
| |[pic]A. |
| |$1,980,000. |
| | |
| | |
| |[pic]B. |
| |$1,930,000. |
| | |
| | |
| |[pic]C. |
| |$1,920,000. |
| | |
| | |
| |[pic]D. |
| |$1,900,000. |
| | |
Latihan Chapter 14
|1. |An auditor wants to determine that all sales adjustments are recorded. This relates to which of the following audit |
| |objectives? |
| |[pic]A. |
| |the transaction class audit objective for occurrence |
| | |
| | |
| |[pic]B. |
| |the transaction class audit objective for accuracy |
| | |
| | |
| |[pic]C. |
| |the account balance audit objective for valuation |
| | |
| | |
| |[pic]D. |
| |the transaction class audit objective for completeness |
| | |
|2. |If the auditor is concerned about the risk of fraud in the revenue cycle, which of the following best describes auditor |
| |concerns about eh potential for fraud related to credit sales? |
| |[pic]A. |
| |management fraud – high risk; employee fraud – high risk |
| | |
| | |
| |[pic]B. |
| |management fraud – high risk; employee fraud – low risk |
| | |
| | |
| |[pic]C. |
| |management fraud – low risk; employee fraud – high risk |
| | |
| | |
| |[pic]D. |
| |management fraud – low risk; employee fraud – low risk |
| | |
|3. |The auditor is studying a ratio of accounts receivable growth rate to the growth rate of sales. Which of the following |
| |indicates a potential risk of collection problems in accounts receivable? |
| |[pic]A. |
| |Sales grew by 10% and receivables grew by 11% from year one to year two. |
| | |
| | |
| |[pic]B. |
| |Sales declines by 2% and receivables declined by 7% from year one to year two. |
| | |
| | |
| |[pic]C. |
| |Sales grew by 10% and receivables declined by 2% from year one to year two. |
| | |
| | |
| |[pic]D. |
| |Sales grew by 5% and receivables grew by 17% from year one to year two. |
| | |
|4. |Which of the following controls most likely would be effective in offsetting the tendency of sales personnel to maximize |
| |sales volume at the expense of high bad debt write-offs? |
| |[pic]A. |
| |Employees responsible for authorizing sales and bad-debt write offs are denied access to cash. |
| | |
| | |
| |[pic]B. |
| |Employees who review exception reports based on the computer matching of shipping information and data on sales invoices do |
| |not have the authority to write-off bad debts. |
| | |
| | |
| |[pic]C. |
| |Employees who approve credit limits included in a master customer file are separated from the sales function. |
| | |
| | |
| |[pic]D. |
| |The accounts receivable master file (accounts receivable subsidiary ledger) is reconciled with the general ledger control |
| |account by an employee independent of the authorization of credit. |
| | |
|5. |Which of the following controls most likely would help ensure that all credit sales transactions of an entity are recorded? |
| |[pic]A. |
| |The computer compares sales orders with a customer's credit limit and current account balances. |
| | |
| | |
| |[pic]B. |
| |The accounts receivable master file (accounts receivable subsidiary ledger) is reconciled with the general ledger control |
| |account. |
| | |
| | |
| |[pic]C. |
| |The accounting department supervisor controls the mailing of monthly statements to customer and investigates any difference |
| |reported by customers. |
| | |
| | |
| |[pic]D. |
| |The computer prints a report of all shipments that have not been matched with a sales invoice. |
| | |
|6. |Which of the following internal control procedures most likely would assure that no fictitious billings have been posted to |
| |the accounts receivable ledger? |
| |[pic]A. |
| |The computer compares the sum of daily sales with the total of posting (debits) to the accounts receivable master file. |
| | |
| | |
| |[pic]B. |
| |The computer compares each sales invoice with supporting shipping information. |
| | |
| | |
| |[pic]C. |
| |The accounts receivable master file (accounts receivable subsidiary ledger) is reconciled with the general ledger control |
| |account. |
| | |
| | |
| |[pic]D. |
| |Each shipment on credit is supported by prenumbered sales invoice. |
| | |
|7. |An auditor most likely would review an entity's periodic accounting for the numerical sequence of shipping documents and |
| |invoices to support management's financial statement assertion of |
| |[pic]A. |
| |existence or occurrence. |
| | |
| | |
| |[pic]B. |
| |rights and obligations. |
| | |
| | |
| |[pic]C. |
| |valuation or allocation. |
| | |
| | |
| |[pic]D. |
| |completeness. |
| | |
|8. |Sound internal control procedures dictate that defective merchandise returned by customers should be presented initially to |
| |the |
| |[pic]A. |
| |accounts receivable supervisor. |
| | |
| | |
| |[pic]B. |
| |receiving clerk. |
| | |
| | |
| |[pic]C. |
| |sales management. |
| | |
| | |
| |[pic]D. |
| |sales clerk. |
| | |
|9. |An auditor would consider a cashier's job description to contain compatible duties if the cashier receives remittances from |
| |the mailroom and also prepares the |
| |[pic]A. |
| |prelist of individual checks. |
| | |
| | |
| |[pic]B. |
| |monthly bank reconciliation. |
| | |
| | |
| |[pic]C. |
| |daily deposit slip. |
| | |
| | |
| |[pic]D. |
| |remittance advices. |
| | |
|10. |The questions below appear on an Internal Control Questionnaire. Which question, if answered NO, would have disclosed|
| |that the cashier diverted cash received over the counter from a customer to his or her own use and wrote off the |
| |receivable as a bad debt? |
| |[pic]A. |
| |Are aging schedules of accounts receivable prepared periodically and reviewed by a responsible official? |
| | |
| | |
| |[pic]B. |
| |Are journal entries approved by a responsible official? |
| | |
| | |
| |[pic]C. |
| |Are receipts given directly to the cashier by the person who opens the mail? |
| | |
| | |
| |[pic]D. |
| |Are remittance advices, letter, or envelopes that accompany receipts separated and given directly to the accounting |
| |department? |
| | |
|11. |In updating a computerized accounts receivable file, which one of the following would be used as a batch control to |
| |verify the accuracy of posting cash remittances? |
| |[pic]A. |
| |the sum of net sales. |
| | |
| | |
| |[pic]B. |
| |the sum of cash deposits less discounts taken by customers |
| | |
| | |
| |[pic]C. |
| |the sum of cash deposits plus discounts taken by customers |
| | |
| | |
| |[pic]D. |
| |the sum of net sales plus discounts taken by customers |
| | |
|12. |An entity with a large volume of customer remittances by mail could most likely reduce the risk of employee |
| |misappropriation of cash by using |
| |[pic]A. |
| |employee fidelity bonds. |
| | |
| | |
| |[pic]B. |
| |independently prepared mailroom prelists. |
| | |
| | |
| |[pic]C. |
| |daily check summaries. |
| | |
| | |
| |[pic]D. |
| |a bank lockbox system. |
| | |
|13. |Immediately upon receipt of cash, a responsible employee should |
| |[pic]A. |
| |prepare a prelisting of cash received or a remittance listing. |
| | |
| | |
| |[pic]B. |
| |record the amount in the cash receipts journal. |
| | |
| | |
| |[pic]C. |
| |update the subsidiary accounts receivable records. |
| | |
| | |
| |[pic]D. |
| |prepare a deposit slip in triplicate. |
| | |
|14. |An auditor's purpose in reviewing credit ratings of customers with delinquent accounts receivable is most likely to |
| |obtain evidence concerning management's assertions about |
| |[pic]A. |
| |presentation and disclosure. |
| | |
| | |
| |[pic]B. |
| |existence or occurrence. |
| | |
| | |
| |[pic]C. |
| |rights and obligations. |
| | |
| | |
| |[pic]D. |
| |valuation or allocation. |
| | |
|15. |The negative request form of accounts receivable confirmation is useful particularly when the |
| |[pic]A. |
| |assess level of control risk for accounts receivable is high, the number of small balances is many, and the |
| |consideration by the recipient is likely |
| | |
| | |
| |[pic]B. |
| |assess level of control risk for accounts receivable is high, the number of small balances is few, and the |
| |consideration by the recipient is likely |
| | |
| | |
| |[pic]C. |
| |assess level of control risk for accounts receivable is low, the number of small balances is many, and the |
| |consideration by the recipient is likely |
| | |
| | |
| |[pic]D. |
| |assess level of control risk for accounts receivable is low, the number of small balances is many, and the |
| |consideration by the recipient is unlikely |
| | |
|16. |Which of the following most likely would be detected by an auditor's review of a client's sales cutoff? |
| |[pic]A. |
| |unrecorded sales for the year |
| | |
| | |
| |[pic]B. |
| |lapping of year-end accounts receivable |
| | |
| | |
| |[pic]C. |
| |excessive sales discounts |
| | |
| | |
| |[pic]D. |
| |unauthorized goods returned for credit |
| | |
|17. |Which of the following most likely would give the most assurance concerning the valuation assertion of accounts |
| |receivable? |
| |[pic]A. |
| |Tracing amounts in the subsidiary ledger to details on shipping documents. |
| | |
| | |
| |[pic]B. |
| |Comparing receivable turnover ratios to industry statistics for reasonableness. |
| | |
| | |
| |[pic]C. |
| |Inquiring about receivables pledged under loan agreements. |
| | |
| | |
| |[pic]D. |
| |Assessing the allowance for uncollectable accounts for reasonableness. |
| | |
|18. |Cutoff tests designed to detect credit sales made before the end of the year that have been recorded in the subsequent |
| |year provide assurance about management's assertion of |
| |[pic]A. |
| |presentation. |
| | |
| | |
| |[pic]B. |
| |completeness. |
| | |
| | |
| |[pic]C. |
| |rights. |
| | |
| | |
| |[pic]D. |
| |existence. |
| | |
|19. |When sending positive confirmations, which of the following would NOT be an appropriate way to address non-response by a |
| |customer? |
| |[pic]A. |
| |Search for evidence of subsequent cash receipt from the customer. |
| | |
| | |
| |[pic]B. |
| |Match open invoices to underlying bills of lading and customer's orders. |
| | |
| | |
| |[pic]C. |
| |Send negative confirmations in the place of positive confirmations |
| | |
| | |
| |[pic]D. |
| |Assume that the non-response is 100% in error and project the misstatement on the population. |
| | |
LATIHAN CHAPTER 15.
|1. |Which of the following industries would have the greatest concerns about purchases cutoff at month end, unrecorded |
| |liabilities, and accounting for advertising allowances provided by vendors? |
| |[pic]A. |
| |manufacturer of construction equipment. |
| | |
| | |
| |[pic]B. |
| |retail grocer |
| | |
| | |
| |[pic]C. |
| |a hotel |
| | |
| | |
| |[pic]D. |
| |a local school district |
| | |
|2. |If the auditor is concerned about the risk of fraud in the expenditure cycle, which of the following best describes auditor |
| |concerns about the potential for fraud in the expenditure cycle? |
| |[pic]A. |
| |management fraud – high risk; employee fraud – high risk |
| | |
| | |
| |[pic]B. |
| |management fraud – high risk; employee fraud – low risk |
| | |
| | |
| |[pic]C. |
| |management fraud – low risk; employee fraud – high risk |
| | |
| | |
| |[pic]D. |
| |management fraud – low risk; employee fraud – low risk |
| | |
|3. |The auditor is studying a ratio of accounts payable turn days. Which of the following indicates a potential risk of |
| |unrecorded liabilities? |
| |[pic]A. |
| |Accounts payable turn days increased from 28 days to 45 days from year one to year two. |
| | |
| | |
| |[pic]B. |
| |Accounts payable turn days increased from 28 days to 30 days from year one to year two. |
| | |
| | |
| |[pic]C. |
| |Accounts payable turn days decreased from 28 days to 15 days from year one to year two. |
| | |
| | |
| |[pic]D. |
| |Accounts payable turn days decreased from 30 days to 25 days from year one to year two. |
| | |
|4. |The internal document commonly used to authorize the recording and payment of a credit purchase in the purchases journal is |
| |a: |
| |[pic]A. |
| |purchase requisition. |
| | |
| | |
| |[pic]B. |
| |purchase order. |
| | |
| | |
| |[pic]C. |
| |vendor's invoice. |
| | |
| | |
| |[pic]D. |
| |voucher. |
| | |
|5. |When goods are received, the computer would compare receiving information with information from which of the following |
| |documents and generate an exception report of any discrepancies? |
| |[pic]A. |
| |purchase order and purchase requisition information |
| | |
| | |
| |[pic]B. |
| |vendor's invoice information |
| | |
| | |
| |[pic]C. |
| |vendor's shipping document and purchase order information |
| | |
| | |
| |[pic]D. |
| |vendor's shipping document and vendor's invoice information |
| | |
|6. |Describe the programmed control procedure that provides assurance that all the merchandise for which the client was billed |
| |was received. Assume that the computer prepares an exception report and that follow-up procedures are effective. Programmed |
| |edit checks compare: |
| |[pic]A. |
| |quantities and prices on the voucher with quantities and prices on the purchase order. |
| | |
| | |
| |[pic]B. |
| |quantities on the voucher with quantities entered in receiving. |
| | |
| | |
| |[pic]C. |
| |quantities and prices on the voucher with quantities and prices on the vendor's invoice. |
| | |
| | |
| |[pic]D. |
| |quantities times price on the voucher with the amount of cash disbursements. |
| | |
|7. |Internal control is strengthened when the quantity of merchandise ordered is omitted from the purchasing information that can|
| |be accessed through the computer by the |
| |[pic]A. |
| |department that initiated the requisition. |
| | |
| | |
| |[pic]B. |
| |receiving department. |
| | |
| | |
| |[pic]C. |
| |purchasing agent. |
| | |
| | |
| |[pic]D. |
| |accounts payable department. |
| | |
|8. |Which of the following programmed control procedure would be most effective in assuring that recorded purchases are |
| |accurately recorded for transactions that actually occurred? |
| |[pic]A. |
| |The computer compares the quantity ordered from purchase order information with the quantity received from the receiving |
| |department. |
| | |
| | |
| |[pic]B. |
| |Vendor invoice information is compared with purchase order information. |
| | |
| | |
| |[pic]C. |
| |Receiving reports require the signature of the individual who authorized the purchase. |
| | |
| | |
| |[pic]D. |
| |The computer matches voucher information with information supporting purchase orders, receiving reports, and vendor's |
| |invoices. |
| | |
|9. |Which of the following programmed control procedures would be most effective in identifying unrecorded liabilities? |
| |[pic]A. |
| |An exception report identifies all purchase orders that have not been received. |
| | |
| | |
| |[pic]B. |
| |An exception report identifies all vendors' invoices that do not have a voucher. |
| | |
| | |
| |[pic]C. |
| |An exception report identifies all receivings that do not have a voucher. |
| | |
| | |
| |[pic]D. |
| |An exception report identifies all receivings that do not have a vendor's invoice. |
| | |
|10. |An accounts payable terminal operator at a subsidiary company fabricated false invoices from a fictitious vendor, and |
| |entered them in the parent company's accounts payable / cash disbursement system. Ten checks totaling $155,000 were issued |
| |to the vendor. What internal control objective was not achieved to allow the fraudulent misstatement discussed above? |
| |[pic]A. |
| |completeness |
| | |
| | |
| |[pic]B. |
| |cutoff |
| | |
| | |
| |[pic]C. |
| |occurrence |
| | |
| | |
| |[pic]D. |
| |classification |
| | |
| | |
| |[pic]E. |
| |accuracy |
| | |
|11. |Which of the following control procedures is not usually performed in the vouchers payable department? |
| |[pic]A. |
| |determining the mathematical accuracy of the vendor's invoice |
| | |
| | |
| |[pic]B. |
| |having an authorized person approve the voucher |
| | |
| | |
| |[pic]C. |
| |controlling the mailing of the check and remittance advice |
| | |
| | |
| |[pic]D. |
| |matching the receiving report with the purchase order |
| | |
|12. |Which of the following programmed control procedures would be most effective in preventing duplicate payments? |
| |[pic]A. |
| |No checks can be made payable to “cash” or “bearer.” |
| | |
| | |
| |[pic]B. |
| |Prenumbered checks are used and the computer prints an exception report of any breaks in sequence. |
| | |
| | |
| |[pic]C. |
| |After cash disbursement information is compared with uncanceled voucher information the voucher is electronically canceled. |
| | |
| | |
| |[pic]D. |
| |Run-to-run totals compare the beginning balance of the accounts payable file, less cash disbursements, with the ending |
| |accounts payable file. |
| | |
|13. |Which of the following auditing procedures is best for identifying unrecorded trade accounts payable? |
| |[pic]A. |
| |examining unusual relationships between monthly accounts payable balances and recorded cash payments |
| | |
| | |
| |[pic]B. |
| |reconciling vendors' statements to the file of receiving reports to identify items received just prior to the balance sheet |
| |date |
| | |
| | |
| |[pic]C. |
| |investigating payables recorded just prior to and just subsequent to the balance sheet date to determine whether they are |
| |supported by receiving reports |
| | |
| | |
| |[pic]D. |
| |reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payables apply |
| |to the prior period |
| | |
|14. |Which of the following best describes the auditor's responsibility to confirming accounts payable? |
| |[pic]A. |
| |Confirmation of accounts payable is required by generally accepted auditing standards. |
| | |
| | |
| |[pic]B. |
| |Confirmation of accounts payable is a matter of professional judgment and would normally be performed when detection risk is|
| |low. |
| | |
| | |
| |[pic]C. |
| |Confirmation of accounts payable is a matter of professional judgment and would normally be performed when detection risk is|
| |high. |
| | |
| | |
| |[pic]D. |
| |Confirmation of accounts payable is a matter of professional judgment and would normally be performed when control risk is |
| |low. |
| | |
|15. |An auditor decided to confirm accounts payable to accomplish a low level of detection risk for the completeness assertion. |
| |Which of the following is the most reasonable sampling plan? |
| |[pic]A. |
| |Confirm accounts payable with an emphasis on all vendors including zero and small balances. |
| | |
| | |
| |[pic]B. |
| |Confirm accounts payable with an emphasis on the largest account payables. |
| | |
| | |
| |[pic]C. |
| |Confirm accounts payable using probability-proportionate-to-size sampling. |
| | |
| | |
| |[pic]D. |
| |Confirm accounts payable with an emphasis on new vendors, irrespective of the size of the account balance. |
| | |
|16. |Which of the following procedures is least likely to be performed before the balance sheet date? |
| |[pic]A. |
| |testing of internal control over cash |
| | |
| | |
| |[pic]B. |
| |confirmation of receivables |
| | |
| | |
| |[pic]C. |
| |search for unrecorded liabilities |
| | |
| | |
| |[pic]D. |
| |observation of inventory |
| | |
LATIHAN Chapter 16
|1. |For which of the following companies would the auditor have the LEAST concern about the existence of inventory? |
| |[pic]A. |
| |manufacturer of construction equipment |
| | |
| | |
| |[pic]B. |
| |a retail grocer |
| | |
| | |
| |[pic]C. |
| |a computer manufacturer |
| | |
| | |
| |[pic]D. |
| |a hotel |
| | |
|2. |Which of the following would NOT be a signal that an audit client might have a possible problem with phantom inventory (the |
| |existence assertion)? |
| |[pic]A. |
| |inventory increasing faster than sales |
| | |
| | |
| |[pic]B. |
| |decreasing inventory turnover |
| | |
| | |
| |[pic]C. |
| |cost of goods sold on the books not agreeing with tax returns |
| | |
| | |
| |[pic]D. |
| |shipping cost increasing as a percentage of inventory |
| | |
|3. |Which of the following is NOT an important document that supports the recording of inventory in the production process? |
| |[pic]A. |
| |daily production reports |
| | |
| | |
| |[pic]B. |
| |material move tickets |
| | |
| | |
| |[pic]C. |
| |time tickets |
| | |
| | |
| |[pic]D. |
| |material issue slips |
| | |
|4. |Which of the following is an important control over the valuation of inventory? |
| |[pic]A. |
| |The computer accounts for prenumbered materials issues slips and reconciles slips with recording in daily production reports.|
| | |
| | |
| |[pic]B. |
| |The computer accounts for hours worked and hours charged to daily production reports. |
| | |
| | |
| |[pic]C. |
| |Signed inventory move tickets are used to control movement of goods through production department, with tickets reconciled to|
| |daily production reports and completed production reports. |
| | |
| | |
| |[pic]D. |
| |Production planning and control approves all production orders. |
| | |
|5. |Which one of the following controls will be most likely to discover that production costs are not recorded? |
| |[pic]A. |
| |The computer generates a report of all material issue slips, time tickets, and inventory move tickets that are not included |
| |in the daily production reports. |
| | |
| | |
| |[pic]B. |
| |The company has designed independent checks on the agreement of entries for the allocation of manufacturing costs to work in |
| |process with data on materials and labor usage in daily production activity reports. |
| | |
| | |
| |[pic]C. |
| |The company has designed independent checks on the agreement of entries for the transfer of work in process to finished goods|
| |with data in completed production reports. |
| | |
| | |
| |[pic]D. |
| |Management approves all overhead rates and standard costs |
| | |
|6. |A client maintains perpetual inventory records in both quantities and dollars. If the assessed level of control risk is low, |
| |an auditor would probably |
| |[pic]A. |
| |insist that the client perform physical counts of inventory items several times during the year. |
| | |
| | |
| |[pic]B. |
| |apply gross profit tests to ascertain the reasonableness of the physical counts. |
| | |
| | |
| |[pic]C. |
| |increase the extent of tests of controls of the inventory cycle. |
| | |
| | |
| |[pic]D. |
| |request the client to schedule the physical inventory count at the end of the year. |
| | |
|7. |The primary objective of a CPA's observation of a client's physical inventory count is to |
| |[pic]A. |
| |discover whether a client has counted a particular inventory item or group of items. |
| | |
| | |
| |[pic]B. |
| |obtain direct knowledge that the inventory exists and has been properly counted. |
| | |
| | |
| |[pic]C. |
| |provide an appraisal of the quality of the merchandise on hand on the day of the physical count. |
| | |
| | |
| |[pic]D. |
| |allow the auditor to supervise the conduct of the count to obtain assurance that inventory quantities are reasonably |
| |accurate. |
| | |
|8. |Which one of the following procedures would NOT be appropriate for an auditor in discharging his or her responsibilities |
| |concerning the client's physical inventories? |
| |[pic]A. |
| |confirmation of goods in the hands of public warehouses |
| | |
| | |
| |[pic]B. |
| |supervising the taking of the annual physical inventory |
| | |
| | |
| |[pic]C. |
| |carrying out physical inventory procedures at an interim date |
| | |
| | |
| |[pic]D. |
| |obtaining written representation from the client as to the existence, quality, and dollar amount of the inventory |
| | |
|9. |Assume that the auditor has observed the physical inventory and concluded that all inventory quantities are valid. Which of |
| |the following procedure represents the best test of the valuation of inventory at FIFO? |
| |[pic]A. |
| |The auditor randomly selects vendor's invoices for tracing prices from vendor's invoices at the beginning of the year to |
| |prices on the extended inventory listing. |
| | |
| | |
| |[pic]B. |
| |The auditor focuses primarily on prices that have changed by more than 10% since the last year end, and on the pricing of all|
| |new products in inventory, and vouches prices on the extended inventory listing back to vendor's invoices near year-end. |
| | |
| | |
| |[pic]C. |
| |The auditor randomly selects items from the inventory list for vouching prices on an extended inventory listing back to prior|
| |year's working papers. |
| | |
| | |
| |[pic]D. |
| |The auditor randomly selects vendor's invoices for tracing prices from vendor's invoices near the end of the year to prices |
| |on the extended inventory listing. |
| | |
|10. |If a client has a strong perpetual inventory system, the auditor is likely to plan: |
| |[pic]A. |
| |inventory observations at an interim date. |
| | |
| | |
| |[pic]B. |
| |inventory price testing at year-end. |
| | |
| | |
| |[pic]C. |
| |inventory tests of the lower of cost or market at an interim date. |
| | |
| | |
| |[pic]D. |
| |direct confirmations of inventory pledged as collateral for loans. |
| | |
|11. |In the audit of inventory, selecting inventory items from a perpetual master file, going to the location, and obtaining test|
| |counts is intended to produce evidence for which audit objective? |
| |[pic]A. |
| |the transaction objectives that all transactions occurred |
| | |
| | |
| |[pic]B. |
| |the balance objective that inventory exists |
| | |
| | |
| |[pic]C. |
| |the balance objective that all inventory is recorded |
| | |
| | |
| |[pic]D. |
| |the balance objective that the client has rights to the inventory |
| | |
|12. |Which of the following would represent the best evidence for testing the net realizable value of inventory? |
| |[pic]A. |
| |Investigate sale prices on sales of inventory made after year-end. |
| | |
| | |
| |[pic]B. |
| |Vouch inventory prices to vendor invoices at an interim date. |
| | |
| | |
| |[pic]C. |
| |Vouch inventory prices to the perpetual inventory. |
| | |
| | |
| |[pic]D. |
| |Investigate all prices that have decreased by more than 5% during the year. |
| | |
|13. |Which of the following is NOT a significant concern about fraud in the payroll cycle? |
| |[pic]A. |
| |Employees involved in preparing and paying the payroll may process data for fictitious employees and then divert the |
| |paychecks to their own use. |
| | |
| | |
| |[pic]B. |
| |When there is frequent turnover of personnel in a company, there is the risk that a terminated employee is continued on the |
| |payroll. |
| | |
| | |
| |[pic]C. |
| |Management may overstate payroll costs as part of earning management. |
| | |
| | |
| |[pic]D. |
| |Management may overtly misclassify or “pad” labor cost in government contract work to defraud the agency. |
| | |
|14. |A client just read about a business paying employees extraordinary sums of money to a variety of employees. Explain how the |
| |client company would use programmed controls to prevent this type of valuation problem. |
| |[pic]A. |
| |Test a check digit embedded in the employee number. |
| | |
| | |
| |[pic]B. |
| |Perform a limit test related to the class of employee. |
| | |
| | |
| |[pic]C. |
| |Check the employee number against the master payroll file. |
| | |
| | |
| |[pic]D. |
| |Compare the total number of payroll disbursements with a predetermined batch total. |
| | |
|15. |If a programmed control over valuation of individual payroll items is going to be effective, which of the following controls|
| |must also be effective? |
| |[pic]A. |
| |controls over the completeness of payroll time cards |
| | |
| | |
| |[pic]B. |
| |controls over access to payroll reports |
| | |
| | |
| |[pic]C. |
| |controls over the processing of payroll taxes |
| | |
| | |
| |[pic]D. |
| |controls over access to the employee master file |
| | |
|16. |In a computerized payroll system environment, an auditor would be most effective at finding weaknesses in internal controls |
| |over the occurrence of payroll transactions by submitting test data: |
| |[pic]A. |
| |incorrect hash totals. |
| | |
| | |
| |[pic]B. |
| |with total payroll that exceeds a predetermined limit. |
| | |
| | |
| |[pic]C. |
| |with an account number that does not match account numbers on job tickets. |
| | |
| | |
| |[pic]D. |
| |incorrect employee numbers that do not contain appropriate check digits. |
| | |
|17. |The lower assessed level of control risk approach may be used by the external auditor in the personnel services cycle |
| |because, among other factors: |
| |[pic]A. |
| |the chance of employee fraud is remote. |
| | |
| | |
| |[pic]B. |
| |outside governmental auditors spend considerable time investigating the payroll area in most companies. |
| | |
| | |
| |[pic]C. |
| |audit risk in the area relates primarily to the hiring of competent personnel. |
| | |
| | |
| |[pic]D. |
| |payroll transactions are generally routine and processed in a high volume. |
| | |
|18. |Which of the following audit objectives is LEAST LIKELY to be accomplished by vouching payroll transactions to supporting |
| |documentation (e.g., time cards and employee contracts)? |
| |[pic]A. |
| |the occurrence of payroll transactions |
| | |
| | |
| |[pic]B. |
| |the completeness of payroll transactions |
| | |
| | |
| |[pic]C. |
| |the accuracy of payroll transactions |
| | |
| | |
| |[pic]D. |
| |proper cutoff related to payroll transactions |
| | |
JAWABAN LATIHAN BAB 11- 16
|NO |CH 11 |CH 12 |CH 13 |CH 14 |CH 15 |CH 16 |
|1 |D |A |B |B |B |C |
|2 |B |B |B |B |A |D |
|3 |A |C |A |D |C |A |
|4 |C |D |C |C |C |B |
|5 |A |C |C |D |A |A |
|6 |D |C |A |B |B |C |
|7 |C |D |B |D |B |B |
|8 |D |D |D |C |D |C |
|9 |B |C |A |A |C |C |
|10 |B |D |D |B |C |A |
|11 |C |A |B |B |C |B |
|12 |C |A |C |D |C |A |
|13 |D |B |B |A |D |C |
|14 |B |C |C |A |B |B |
|15 |B |A |C |C |B |D |
|16 |A |B |A |A |C |D |
|17 |D |B |A |D | |D |
|18 |B |A |C |B | |B |
|19 | |C |B |C | | |
|20 | | |C | | | |
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related searches
- gordon s 11 functional health patterns
- gordon s 11 functional health assessment
- gordon s 11 functional pattern questions
- gordon s 11 functional patterns
- 11 gordon s functional health patterns
- 11 s p 500 sectors performance
- aicpa auditing standards pdf
- statements on auditing standards aicpa
- aicpa statements on auditing standards
- ii corinthians 11 2 nkjv
- ii corinthians 11 kjv
- seeing double 11 s and numbers