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ACCT 444 Week 5 Quiz
1. (TCO 6) The auditor looks
for an indication on duplicate sales invoices to see whether the invoices
have been verified. This is an example of (Points : 3)
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a test of details of balances.
a test of control.
a substantive test of transactions.
both a test of control and a substantive test of transactions.
1. (TCO 6) Tests of controls
may include which of the following types of evidence? (Points : 3)
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Observation
Reperformance
Inquiries
All of the above
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1. (TCO 6) For efficiency, tests
of controls are frequently done at the same time as (Points : 3)
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analytical procedures.
compliance tests.
tests of transactions.
tests of details of balances.
2. (TCO 6) Analytical
procedures are defined in the auditing standards as (Points : 3)
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compliance tests.
substantive tests.
tests of controls.
helpful procedures not possessing the validity of other tests available to
the auditor.
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2. (TCO 6) Which of the
following is not a direct result of performing analytical procedures?
(Points : 3)
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Identify areas of potential
misstatements.
Reduce detailed audit risk.
Understand the client’s business.
Identify specific errors in the accounts.
2. (TCO 6) Analytical procedures
may be classified as being primarily (Points : 3)
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tests of controls.
substantive tests.
tests of ratios.
tests of details of balances.
3. (TCO 6) Which of the
following audit tests is usually the least costly to perform? (Points :
3)
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Analytical procedures
Tests of controls
Tests of balances
Substantive tests of transactions
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3. (TCO 6) Which of the
following audit tests is usually the most costly to perform? (Points :
3)
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Analytical procedures
Tests of controls
Tests of balances
Substantive tests of transactions
4. (TCO 6) Which of the
following tests commonly occur together? (Points : 3)
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Substantive tests of
transactions and tests of controls
Substantive tests of transactions and obtaining an understanding of internal
controls
Analytical procedures and tests of controls
All of the above
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4. (TCO 6) Which of the
following relationships between types of tests and audit evidence is not
correct? (Points : 3)
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Tests of details and documentation
Tests of controls and observation
Tests of details and observation
Substantive tests of transactions and reperformance
5. (TCO 6) The sequence of
steps in gathering evidence as the basis of the auditor’s opinion are
(Points : 3)
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substantive tests, initial
assessment of control risk, and tests of controls.
initial assessment of control risk, substantive tests, and tests of
controls.
initial assessment of control risk, tests of controls, and substantive
tests.
tests of controls, initial assessment of control risk, and substantive
tests.
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5. (TCO 6) The purpose of tests
of controls is to provide reasonable assurance that the (Points : 3)
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accounting treatment of
transactions and balances is valid and proper.
internal control procedures are functioning as intended.
entity has complied with GAAP disclosure requirements.
entity has complied with requirements of quality control.
6. (TCO 9) It is important
that sales be billed and recorded in the journal as soon as possible
after (Points : 3)
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the order is received.
the order is received and credit is approved.
credit is approved and it is verified that there is enough inventory to
fill the order.
the shipment takes place.
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6. (TCO 9) The use of
prenumbered sales invoices is meant to prevent (Points : 3)
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the failure to bill or record
sales.
duplicate billings and recording of sales.
both A and B are correct.
neither A nor B is correct.
6. (TCO 9) Prenumbered documents
will only be useful for control purposes if (Points : 3)
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a different numerical sequence is
used for each company.
the sequence is accounted for periodically.
employees do not have access to the complete sequence.
All of the above
7. (TCO 9) Which one of the
following is not an auditor’s concern about a key authorization point in
the sales or collection cycle? (Points : 3)
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The receiving room must have
authorization before releasing items to inventory control.
Credit must be authorized before the sale.
Goods must be shipped after the authorization.
Prices must be authorized.
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7. (TCO 9) At which point in an ordinary
sales transaction would a lack of specific authorization be of least
concern to the auditor? (Points : 3)
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Granting of credit
Shipment of goods
Determination of discounts
Selling of goods for cash
8. (TCO 9) The credit-granting
functions should be separated from which of the following? (Points : 3)
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Purchasing functions
Manufacturing function
Sales function
None of the above
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9. (TCO 9) When designing
substantive tests of transactions for sales, the auditor is concerned
with the possibility of several types of misstatements. Which of the
following is not one of the types of these misstatements? (Points : 3)
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Sales being included in the
journal for which no shipment was made
Sales to related parties, such as officers and subsidiaries
Sales recorded more than once
Shipments being made to nonexistent customers and recorded as sales
10. (TCO 9) 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 (Points : 3)
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cash receipts recorded in the
cash receipts journal are reasonable.
cash receipts are properly classified.
recorded cash receipts result from legitimate transactions.
existing cash receipts are recorded.
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10. (TCO 9) Which one of the
following would the auditor consider to be an incompatible operation if
the cashier receives remittances from the mailroom? (Points : 3)
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The cashier prepares the daily
deposit.
The cashier makes the deaily deposit at a local bank.
The cashier posts the receipts to the accounts receivable subsidiary ledger
cards.
The cashier endorses the checks.
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