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Ch 11, 12, and 13

Smith Manufacturing Company's accounts receivable clerk... most effective procedure for preventing this activity is to:

require receiving reports to support all credit memorandums before they are approved

For effective internal control, the billing function should be performed by the:

accounting department

Which of the following... is an effective control over A/R

the billing function should be assigned to persons other than those responsible for maintaining A/R subsidiary records

The use of positive (as opposed to negative) form of receivables confirmation is indicated when:

there is a reason to believe that a substantial number of accounts may be in dispute

The auditor is examining copies of sale invoices only for the initials of the person responsible for checking the extensions. this is an example of:

test of controls

An auditor reconciles the total of the A/R sub ledger to the general ledger control account as of OCT 31...which of the following

an opening balance in the sub ledger account was improperly carried forward

Which of the following... audit procedures is most effective in testing credit sales...

trace sample of initial sales slips through summaries to recorded general ledger sales

The auditors have not been able to confirm a large A/R... the auditors report on the financial statement should include

neither a comment on the use of alternative auditing procedure nor and opinion qualification

To determine that sales transaction have been recorded int eh proper accounting period... performing a cutoff review

analyze transactions occurring within a few days before and after year end

The confirmation of the clients trade A/R is a means... considered to be a generally accepted auditing:


Which of the following... would be the best protection for a company that wishes to prevent "lapping" of trade A/R

have customers send payments directly to the company's depository bank

Which of the following... statements regarding the audit of negotiable notes rec is correct

confirmation from the customer of a note is not an acceptable alternative to inspection

On June 15, 200, Ward, should Ward report

he should have to disclaim the opinion or qualify his opinion on the income statement.... but could issue an unmodified opinion on the 31

From which of the following evidence gathering audit procedures would an auditor obtain.. concerning the existence of inventories

observation of physical inventory counts

A clients physical count of inventories was lower than inventories quantity shown... could be the result of the failure to record:


An inventory turnover analysis is useful to the auditor because it may detect

the existence of obsolete merchandise

When an auditor tests a clients cost accounting system... primarily to determine:

costs have been properly assigned to finished goods, W-I-P, and COGS

An auditor would be least likely to learn slow-moving inventory through

vouching of year-end purchases

An auditor has accounted for a sequence of inventory tags and is now going to trace information... purpose to obtain assurance that

all inventory represented by an inventory tag is listed on the inventory sheets

From the auditors POV, inventory counts are more acceptable prior to year end when

accurate perpetual inventory records are maintained

Purchase cutoff procedures should be designed to test whether or not all inventory

is owned by the company

Which of the following... effective control that encourages receiving departments personal...

quantities ordered are excluded from the receiving department copy of the purchase order

To strengthen the system of internal control... a company"s receiving department should

accept merchandise only if a purchase order or approval granted by the purchasing department is on hand

A client's materials purchasing cycle begins with requisitions...and auditors primary objective in reviewing this cycle is to

evaluate the reliability of information generated as a result of the purchasing process

An important consideration to the auditor in the audit of equipment is to determine

whether a recorded gain on trade of equip is appropriate

Tenessee Company... most likely learn of this error by

reviewing the titles and descriptions for all the construction work orders issued during this year

To achieve effective internal control over fixed asset additions...

authorization and approval of major fixed asset addition

Which of the following...policies is an internal control weakness related to the acquisition of factor equip

acquisition are to be made through and approved by the department in need of the equipment

A normal audit procedure is to analyze the current yet,,, in support of the audit proposition that

expenditures for the fixed assets have been capitalized

Which of the following... is the best evidence of real estate ownership at the balance sheet date

paid real estate tax bills

Which of the following... audit procedures would be least likely to lead the auditors to find unrecorded fixed asset disposals

review of repairs and maintenance expense

the auditors may conclude that deprecation charges are insufficient by noting

excessive recurring losses on assets retired

Patentex developed a new secret formula...will probably

confer with management regarding ownership of the secret formula

In the examination of PPE the auditor try to determine all of the following except

adequacy of replacement funds

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