34 terms


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, CPA..how 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